Kenya's Hospitality Sector Growth to Remain Neutral in 2021-Study

A luxurious hotel within Lamu’s Shella Island (file photo).
25 January 2021

Nairobi — Kenya's hospitality sector growth is projected to remain neutral in 2021, a new data shows.

The data by Cytonn Real Estate on 2021 Markets Outlook says the sector's growth will be supported by a continued focus on areas that boost its performance this year.

"With the expected gradual recovery supported by financial aid from the government through the Post-Corona Hospitality Sector Recovery Stimulus package, repackaging of the tourism sector to appeal to domestic tourists and relaxation of travel advisories," reads the report.

However, the sector will continue to experience key challenges which include, the second wave of the COVID-19 pandemic which is likely to see travel restrictions by most countries and people exercising more caution.

Travel advisories with countries such as the United States giving advisories due to the increased caution in Kenya due to crime, terrorism, health issues, and kidnapping will also be a challenge to the sector's performance in 2021.

"Reduced private sector lending as most lenders have pulled back or ceased new lending to business on overall with the Kenyan hospitality industry not exempted as a strategy of cushioning themselves against the pandemic," it added.

In 2020, the hospitality sector recorded subdued performance attributed to the COVID-19 pandemic which resulted in reduced demand for hospitality facilities and services given the overreliance on tourism and MICE.

The hospitality sector recorded declines in performance evidenced by the decline in serviced apartment's yields by 3.6percent points to 4.0percent from 7.6percent in 2019.

The occupancy rates also declined by 31.3percent points to 48.0percent from 79.4percent while the monthly charges per SQM declined by 14.9percent from Sh2,806 to Sh2,448 as facilities offered discounts to attract and maintain clients amid a tough economic environment.

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