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Hotel Expansion

Starwood eyeing Kenya

Wolfgang H. Thome, eTN  Aug 04, 2010

(eTN) - Following the announcement of the takeover of the Holiday Inn Nairobi by South Africa’s Southern Sun Hotel Group, further news has emerged that Starwood, the owners of, among others, the Sheraton global hotel brand, is also eyeing an entry into East Africa’s biggest economy. Present global brands like Intercontinental and Hilton have been operating leading hotels in Nairobi for decades, and Hilton for some time even owned and operated two safari lodges, before divesting those interests at a time when the market had fallen a little flat and concentrating on its core business with the Nairobi Hilton Hotel. Sheraton, for a brief period in the 1980s, managed a beach property in Mombasa but having failed back then to understand the market, soon afterwards withdrew from the contract.

Intercontinental has owned and operated its Nairobi flagship property since the mid 1970s and recently opened a Crown Plaza hotel in the upper hill part of the city, which it operates on behalf of an ownership consortium, effectively covering the luxury and up-market segment in Kenya’s capital.

Sheraton in contrast manages hotels in Kampala and Addis Ababa, both owned by the same middle Eastern group, which also owns the Djibouti Sheraton, but had pulled out of a management deal in Kenya it had entered into with a highly-controversial individual claiming to own former Block Hotels – in spite of warnings by many industry observers at the time – who, according to a source in Nairobi, for a while spent more time in court and remand than behind his desk. The recent strong growth in Kenya’s convention and meeting market, however, has made Nairobi in particular once more interesting for the “big boys,” and the expected opening in 2012 of the Radisson Hotel – a Rezidor brand – will add pressure to other global players to seek out a property to either own and manage or at the very least sign a long-term management contract to establish a presence in the largest city of the region.

Over the past years, Kempinski has built a significant presence in Tanzania with one lodge, resorts, and the leading business hotel in Dar es Salaam, but has not spread its wings further into the region, while Fairmont has a strong presence in Kenya with lodges and the Norfolk Hotel in Nairobi. Again, however, it abandoned plans to build a hotel in Kampala when the global financial and economic crisis made the going tough.

It is thought that with the further integration of the East African Community (EAC) and the harmonization and streamlining of the legislative and regulatory frameworks in coming years, the EAC will become a major focal point for investments by global hospitality giants, aided also by the fact that Nairobi has become THE regional aviation hub, further aided when the expansion and rehabilitation of the Jomo Kenyatta International Airport has been concluded.

Starwood eyeing Kenya
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