Kenya: Serviced apartments are performing better than hotels in Nairobi, a report by Cytonn Investments has revealed.
The hospitality sector report 2016 by Cytonn Investments reveals that serviced apartments have average occupancies of 90 per cent and revenue per available room at $127 (Sh12,874).
Upper Hill is the best performing market with average revenue per room of $140 (Sh14,192) and occupancy of 97per cent. The Nairobi Central Business District has the lowest total revenue per available room of $85 (Sh8,616).
According to the report, average hotel occupancy for all regions in Kenya remains low at an average of 33 per cent for 3, 4 and 5 Star rated hotels, with revenue per available room at an average of $98 (Sh9, 934). The low occupancy is attributed to insecurity brought about by terrorist attacks, which in turn has led to issuance of negative travel advisories, and heightened competition from both local and emerging markets in the region such as Ethiopia, with relatively low room rates.
“We take a look at the key fundamentals driving the sector among them the business travellers and tourism and review how this translates to occupancy levels and revenues per room and hence the returns available for the investors. We are now increasingly witnessing a shift in consumer preference away from mainstream hotels, towards serviced apartments, especially in the Nairobi region. With more affordable rooms for long-stay business travellers, increased security and larger room sizes, serviced apartments have outperformed hotels in both revenue per room and occupancy,” said Cytonn Investment chief investment officer Elizabeth Nkukuu.</p
