Thursday, 10 May 2018

EAST AFRICA: Nairobi With Highest Number Of Hotel Rooms And Hotels In The Region, It Was Lowest In Hotel Room Revenue 2017

Nairobi’s revenue per available room (RevPAR) a performance metric for the hotel industry was the lowest among other East Africa capitals in 2017, probably because of slowed business travel during the elections last year.

Nairobi registered the sharpest drop in RevPAR of 17.8 per cent to $60 (Sh6,000) last year.

Nairobi Hotel occupancy dropped causing it to follow other capitals in the region including Addis Ababa, Kampala, Dar es Salaam and Kigali, a survey by Cytonn Investment showed.

Nevertheless, it should be noted that Nairobi has the highest number of Hotel Rooms and Hotels in the entire region.

However, it is expected to recover on the back of high tourist arrivals, public sector support for tourism, as well as new air routes in the long term, the firm noted in its survey report.

RevPAR is calculated by dividing a hotel’s total guest room revenue by the number of available rooms in a given time period.

The metric is often used to compare performance between competitor hotels, defined by geographical location and market segment.

The Ethiopian market registered the highest RevPAR performance in 2017 at $104 against the regional average of $79, buoyed by strong demand from diplomatic and corporate clients.

Addis Ababa is home to the African Union offices, the UN Economic Commission for Africa, foreign missions, regional NGOs as well as the UN Conference Centre and the fast-paced growth of the Ethiopian Airlines which currently serves 101 destinations, Cytonn noted.

Kampala, registered a solid performance in 2017 with its average RevPAR increasing by 11.9 per cent to $94 compared to the previous year, lifted by an increase in domestic and regional tourism.

Kigali, recorded a slight increase in average RevPAR of 2.8 per cent to settle at $73.

However, as per the report, bed occupancy rates in Kigali recorded a decline of 3.9 per cent attributable to the sharp increase in average daily rates which rose by 5.7 per cent during the year, Cytonn noted.

Nairobi registered the highest number of International arrivals in 2017

Nairobi - 1.4

Kampala - 1.3

Addis Ababa - 1.2

Dar es Salaam - 1.2

Kigali - 0.9

Dar es Salaam, saw its average RevPAR drop by 13.7 per cent to $62 largely because of the shift of government operations to Dodoma as well as stalled entry of foreign firms.

Dar es Salaam also witnessed a 5.6 per cent decline in bed occupancy rates in 2017.

And though Kenya registered the highest number of international arrivals in the region at 1.4 million, Nairobi’s RevPAR was not reflected in bed occupancy which stood at 47 per cent, as many visitors opted to stay at the coast or in national parks.

Increased occupancy of facilities outside Nairobi helped Kenya to post an unexpected overall 20.3 per cent growth in tourism earnings to Sh120 billion.

The sharp increase came despite some expectations of a slowdown due to a prolonged and tense election period and the accompanying risk of violence.

Average Hotel occupancy rates in East Africa

Kampala - 56%

Nairobi - 47%

Kigali - 49%

Dar es Salaam - 52%

Addis Ababa - 54%

Kenya’s tourism performance in election years has been low due to fear of unrest and violence.

For instance, government statistics show that tourism was severely affected during the 2007/2008 period due to post-election violence.

International tourist arrivals slumped from the highest peak of the decade, 1,817,000 in 2007, to 1,203,200 in 2008.

Rvenue dropped from Sh65.2 billion to a low of Sh52.7 billion as visitors kept away from the country.

In the 2002 General Election the sector was also hit hard, with earnings sliding 11 per cent from Sh24.3 billion the previous year to Sh21.7 billion.

A similar trend was recorded in the 2013 electoral season despite the fact that the knocks were not as extensive as was witnessed in 2002 and 2007.

Kenya’s 2003 tourism earnings fell slightly by 2.1 per cent, attributed to the fact the elections were relatively peaceful.

Tourism in Kenya was affected by election turmoil 2008 and 2017 and terror attacks, which saw the decline in overall decline in tourism arrivals between 2011 and 2015.

Tourism Observer
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