The second instalment of the East Africa Hospitality Forum took place last week at the 2023 East Africa Property Investment (EAPI) Summit held at Radisson Blu Hotel, Upper Hill District Nairobi. Below we highlight some of our key takeaways from the information packed sessions;

• Market Overview

Like any other region, East Africa’s hospitality market was one of the worst hit economic sectors as a result of the Covid-19 pandemic disruptions. Wayne Godwin, Head Of East Africa, JLL & Head of Hospitality Group Africa, however opened the panel discussion by pointing out that the sector has since recorded significant improvements in its activities and performance having come from the period of turmoil. Various hotels have since reopened their doors after having scaled down their operations as result of losses generated during the pandemic. On the flip side, he highlighted that the persistent inflation rates have negatively impacted the optimum operations and performance of the market. Despite this, he noted that there is light at the end of the tunnel as inflation rates will ease.

• Development And Projects

There has been a slow development of projects in the sector when compared to other Real Estate sectors. This is very evident from the limited development pipeline or number of new completions coupled with  inadequate project financing. Additionally, increased focus and spending on social projects such as the low cost and affordable housing programs by governments has shifted investors attention away from the hospitality sector and as such had an impact on the sector’s progress. 

• Banking And Hospitality Roundtable

East Africa’s hospitality sector is a vibrant market owing to its positive demographics driving the demand for services as highlighted by Ebele Ogbue, Regional CEO at UBA Bank. However, key challenges have been on the greenfield side, coupled with the access to financing which continue to weigh down the sector’s growth. For funding, he noted that banks look at various dynamics such as what segment a hotel attracts, type of tourists frequenting the hotel (local or international), and the type of operator(brand or an individual), before lending capital to a business. As such, some are left out.

In addition, Teddy Bukhala, an Investment Officer at Proparco added that they look at the longevity of a hotel business before investing in it. The longer they’ve been in the market the higher the probability to secure investment funding. He further pointed out that investment preference is more leaned towards business hotels compared to other investment properties in the hospitality market such as restaurants. This is because it’s easier working with them, and also trace their financial and activity track records.

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