Kenya's luxury hospitality sector soars despite challenges

Zawya

24-04-2025

The sector is experiencing significant growth, driven by international visitors and a stable economy. Experts at the upcoming EAPI Summit in Nairobi will address challenges, while exploring opportunities for investment in this thriving market.
Kenya's luxury hospitality sector is experiencing significant growth, spurred by an increasing arrival of international visitors, a stable economy, and a rising middle class. Industry experts attribute this surge to the country's unique blend of natural beauty, strategic location, and supportive government policies — all of which are attracting substantial investment in high-end tourism and hospitality.
The dynamics of this thriving sector will be a key focus at the upcoming East Africa Property Investment (EAPI) Summit, a premier real estate event. The 12 th annual summit, to be held in Nairobi on May 7-8, 2025, will gather over 450 global investors, developers, and real estate professionals. Participants will explore opportunities to capitalize on investment potential in Kenya, Tanzania (including Zanzibar), Uganda, Rwanda, and Ethiopia — countries showing promising signs of economic recovery and political stabilization.
Speaking on the growth of the hospitality industry, Bani Haddad, Founder and Managing Director of Aleph Hospitality, highlights Kenya's untapped potential.
'Kenya presents a great opportunity for hospitality investment due to its unique combination of untapped potential, economic stability, strategic location, and government incentives. Add to that a 35% increase in international visitors and a growing middle class with disposable income. It's clear that the demand for quality hospitality services will continue to rise, offering promising opportunities for local and international investors,' says Haddad.
Haddad's Aleph Hospitality is the largest independent hotel management company in the Middle East and Africa.
Mark Dunford, CEO of Knight Frank Kenya, adds that improved air connectivity is critical to sustaining this growth and the influx of tourists into Kenya. 'Jomo Kenyatta International Airport must remain a hub for Sub-Saharan Africa region with additional long-haul flights to support along with further investment in the other local airports,' says Dunford.
Jomo Kenyatta International Airport is an international airport serving Nairobi, the capital and largest city of Kenya.
Fiona Craw, Vice President of the Hotels&Hospitality Group at JLL Africa, notes that Kenya's hospitality sector attracts significant investment, particularly in Nairobi and the Masai Mara area. This growth is driven by robust demand across sectors including corporate, leisure, MICE (Meetings, Incentives, Conferences, and Exhibitions), and government.
Nairobi's position as a key economic and transit hub in Africa, coupled with Masai Mara's global reputation as a premier safari destination, further fuels this investment trend.
Craw says the ongoing infrastructure development in Kenya, especially in Nairobi, is enhancing accessibility and supporting the country's efforts to establish itself as a leading MICE tourism destination. 'This strategic positioning is driving demand for high-quality accommodation and state-of-the-art meeting facilities,' says Craw.
Despite promising opportunities, experts acknowledge several challenges hobbling the industry's growth.
'Kenya's hospitality industry, while exhibiting resilience and growth, faces several challenges such as security concerns, regulatory hurdles, supply chain disruptions, and human resource challenges. The high cost of financing and inflation-driven operational costs further strain businesses,' says Aleph Hospitality's Haddad.
He adds: 'For Kenya to solidify its position as a premier global investment destination, collaboration with government and private sectors is key to improving infrastructure and security. Streamlining land acquisition and development approvals will cut delays and costs, making business easier. Diversifying suppliers can ease supply chain issues while investing in talent retention will boost efficiency and service quality'.
Visa complexities are another hurdle that could stunt the growth of Kenya's luxury hospitality sector. However, visa complexities are not unique to Kenya as many countries in the rest of the African continent face similar challenges.
Visa complexities in Africa are marked by limited visa-free travel, with only a small percentage of countries offering such options to fellow African nations. The process is often expensive and bureaucratic, requiring lengthy procedures and embassy visits. There is also a significant disparity in passport strength across the continent, with some countries enjoying extensive visa-free access while others face severe restrictions. Political instability and security concerns further complicate mobility for citizens from certain regions.
Says Dunford of Knight Frank Kenya: 'There are a number of issues facing the industry at present. The easiest of these issues to overcome would be the simplification of the visa/entry process to tangibly encourage visitors.'
Another issue that potential investors should be mindful of is the oversupply of hotel rooms in Nairobi, which heightens competition among hotel operators. JLL Africa's Craw estimates that Nairobi recently experienced a significant supply increase, with over 2,000 new hotel rooms introduced in just 18 months. 'As a result, market performance is expected to face downward pressure throughout 2025 as the sector works to absorb this new inventory,' she says.
Daniel Trappler, Senior Director of Development for Sub-Sahara Africa at Radisson Hotel Group, partly agrees with Craw about the oversupply of hotel rooms, in some urban Nairobi areas. Trappler says, however, that there are certain nodes that represent pockets of value that are not yet adequately supplied, and with the correct brand could certainly capture market share in Nairobi and lure guests easily, especially with brands that RHG does not yet have operational in the city. Investors that have access to the right capital are therefore in a good position to leverage from this market opportunity. Trappler further adds that both the entry level luxury brand Radisson Collection, and the lifestyle upscale brand Radisson RED, would serve owners with strong returns if built at the right locations. The group is eager to expand in Nairobi in this regard.
Despite the oversupply of hotel rooms and intense competition, there are pockets of growth and excellence. Marriott International, which has a presence in Kenya as it operates city hotels in Nairobi and safari lodges in the Masai Mara, says it is seeing strong growth in its business.
Jugal Khushalani, Marriott International's Senior Director for Development in the East Africa region, says: 'There remains an increased appetite for high-end experiences in the market, positioning us to further expand our portfolio of luxury brands through urban hotels and safari lodges. Kenya is positioned for sustained growth across all segments, and we remain committed to growing our footprint in the country and supporting the growth of its tourism sector.'
The experts agree that despite short-term challenges, the long-term outlook for Kenya's hospitality sector remains positive. They have proposed innovative strategies to address these challenges while ensuring sustained growth in the luxury market. The solutions for sustained growth include:
Alternative financing models: Public-private partnership and government-backed incentives can reduce financing costs for new developments.
Sustainable tourism practices: High-end resorts are adopting eco-friendly initiatives such as solar energy usage and marine conservation programs to align with global trends favouring sustainable luxury tourism.
Enhanced air connectivity: Continued investment in Jomo Kenyatta International Airport and regional airports will improve access for long-haul travellers.
Bespoke experiences: Personalization remains key in luxury travel. Exclusive offerings like private safaris, tailored cultural tours, and secluded beachfront villas cater to affluent travellers seeking unique experiences.
With strategic investments and collaborative efforts between government entities and private stakeholders, Kenya is well-positioned to solidify its reputation as a premier destination for luxury travel in Africa. The country's diverse offerings — from world-class safaris to coastal retreats — continue to attract discerning travellers seeking unforgettable experiences.
The 12 th East Africa Property Investment Summit meeting will take place on 7 and 8 May 2025 at Pullman, Upper Hill, Nairobi, Kenya. For more information and to book to attend the EAPI Summit visit https://EAPISummit.com.
Distributed by APO Group on behalf of API Events.