KENYA’S PRIVATIZATION COMMISSION SET TO SELL HOTEL STAKES IN JULY
(Posted 01st July 2013)
Major stakes in some of Kenya’s best known hotels, the InterContinental Nairobi, the Nairobi Hilton and the Mountain Lodge, will be up for grabs by existing shareholders, as Kenya’s Privatization Commission has named July as the month during which these transactions are due to go underway.
The Kenya government presently holds a 33.8 percent stake in the InterContinental Hotel, a 40.57 percent stake in the Nairobi Hilton and a 39.11 percent stake in Mountain Lodge, where Serena Hotels have shown interest, as an existing shareholder, to purchase those shares.
The sale has been on / off for several years now, and involves a far greater portfolio than just these three best known hotels, as properties previously part or fully owned through the Kenya Tourist Development Corporation, some dating back to the days of African Tours and Hotels and Msafiri Inns, are prepared for sale to private investors.
Where the government has other shareholders in the limited liability companies, the existing law demands that those shareholders are given the first right of refusal and have the option of buying out such shares, subject to agreement of course on the valuation of such stakes.
No estimates have been given how much government expects to realize from the sale of those shares in the three prime properties, nor in fact in the upcoming sale of other holdings in hotels, lodges and resorts, of which Kenya Safari Lodges Ltd, comprising Ngulia Safari Lodge, Voi Safari Lodge and the Mombasa Beach Hotels is another jewel in the crown of government holdings.
Tourism is one of Kenya’s key economic sectors, and part of President Kenyatta’s declared plan to achieve a double digit growth during his first 5 year term of office, even though recent attempts to raid the proposed tourism budget by hapless members of the parliamentary budget and appropriation committee have cast serious doubts over such ambitious plans. ‘Tourism can be THE growth engine for Kenya, but it needs the funds to go out and promote the country. If they cut the promotions budget the results will be very disappointing. Tourism is a cash cow for Kenya but needs feeding and looking after. If government puts the foot down on this, investing in the sector will be a guarantee for long term financial returns. We are expanding our airports, a new convention centre is planned for the coast, we are getting new railways and highways, international hotel groups are queuing up to build or manage hotels in Kenya, the future can be very bright. Let us not spoil the party by being shortsighted and cut the promotion budget after the downturn of late 2012 and early 2013. That would be disastrous’ claimed a regular tourism source from Nairobi. The just concluded meeting of the Kenya Association of Hotel Keepers and Caterers, one of the country’s most influential tourism trade associations, had equally demanded that the budget for tourism be fully restored, and secured the support of Cabinet Secretary Phyllis Kandie and members of parliament on the committee for commerce and tourism in their quest.
Projections for 2013 are earnings in excess of 100 billion by the tourism sector, with 3 million arrivals expected by 2015, a target however only achievable if the Kenya Tourism Board is adequately funded to further penetrate new and emerging markets in Eastern Europe, India and the Far East, especially China while working existing markets in Europe and North America with renewed vigour. Watch this space.