Pan Pacific breaks into Africa with its first investment in Kenya

Photo credit: Pan Pacific

The Pan Pacific Hotels Group, a subsidiary of the SGX-listed UOL Group, has launched its first African property in Nairobi, Kenya. Located in the Global Trade Centre complex in the upmarket Westlands business district, the Pan Pacific Serviced Suites Nairobi is ideal for business and leisure travellers, catering to short and long-term stays. It offers 175 rooms, each of which, comes with a dining and lounge area, a fully equipped kitchenette, and a separate laundry area with a washer and dryer.

The Kenyan hotel industry – featuring many international staples like Radisson, Hilton, and Accor – has seen a 38% rise in bed occupancy to over 5.7 million in the first three quarters of 2022 compared to the same period the previous year. A recent report from W Hospitality Group shows a pipeline of 25 new hotels, equating to 3,729 rooms, in Kenya. Despite this, the country only ranks fifth in new hotel development across Africa, lagging Egypt, Nigeria, Morocco, and Ethiopia. However, the Kenyan market has not proven lucrative for all operators. City Lodge, a South African hotel group, recently chose to offload three of its establishments in Nairobi. The decision came after the group encountered difficulties in gaining a substantial market share, coupled with the prospect of a significant marketing investment required to establish its brand. Hilton too closed its 50-year-old hotel in downtown Nairobi at the start of this year.

Tourism, a pillar of Kenya's economy, accounts for 10.4% of the nation's GDP and 5.5% of formal employment. Despite challenges from the pandemic, Kenya's tourism sector saw a considerable surge in international arrivals in 2022. Numbers reached 1,483,752, a 70% increase from the 870,465 in 2021. Easing Covid-19 restrictions worldwide, coupled with strategic initiatives from the Kenyan government and industry, underpinned this boost. Key initiatives include the New Tourism Strategy for Kenya (2021-2025), targeted marketing campaigns, new airline entries, and cruise tourism revival. Consequently, the sector marked a 72% recovery in 2022 compared to 2019.

The US was the leading source of travellers to Kenya in 2022, constituting 16% of the market or 209,360 visitors. Uganda, the UK, and Tanzania followed, contributing 12%, 10%, and 10% respectively. Last year, business tourism accounted for 27.24% of all arrivals, showing a rise from 13.5% in 2019. This growth suggests that, contrary to global expectations of a sluggish recovery, business tourism in Kenya is rebounding more rapidly than the leisure segment.

India led as the largest Asian source of visitors to Kenya in 2022, bringing in 83,106 visitors to the country, followed by China at 20,260. Other Asian nations that had a notable number of visitors include Pakistan (8,117), Japan (4,921), South Korea (3,999), Sri Lanka (2,751), Philippines (2,422), Bangladesh (1,398), Nepal (1,143), and Malaysia (1,007). These visitors engaged in various activities, ranging from business to leisure, and visiting family and friends. For instance, 38% of Indian tourists were in Kenya to visit family and friends, whereas holidays drew 36%. Chinese travellers, on the other hand, primarily visited for holiday purposes (42%), with business accounting for 31%. From Japan, 36% of the visitors were in Kenya for business, and 38% for holiday.

During his recent visit to Nairobi, Singaporean Prime Minister Lee Hsien Loong underscored the strategic significance of Kenya as a potential entry point for Singaporean businesses into East Africa. Furthermore, he identified Kenya's potential to emerge as a more substantial tourism destination for Singaporean travellers. As of now, the number of visitors from Singapore to Kenya remain insignificant. They do not even feature in the list of top 30 arrivals. There is no direct flight connectivity between the two republics.

 

References

‘Pan Pacific Hotels Group aims to double its serviced suites portfolio next year’, EdgeProp, 29 November 2022

‘Why South African company disposed of its Nairobi hotels’, Business Daily, 30 January 2023

‘Annual tourism sector performance report 2022’, Ministry of Tourism, Wildlife & Heritage, February 2023

‘Hotel chain development pipelines in Africa 2023’, W Hospitality Group, March 2023

‘PM Lee Hsien Loong at the joint press conference with South African President Cyril Ramaphosa (May 2023)’, Prime Minister's Office Singapore, 16 May 2023

‘PM Lee Hsien Loong at the Q&A segment of the joint press conference with Kenyan President William Ruto (May 2023)’, Prime Minister's Office Singapore, 18 May 2023

‘Experience graceful luxury at Pan Pacific Serviced Suites Nairobi’, Pan Pacific Hotels Group, 25 May 2023

‘Pan Pacific Hotels Group ventures into Africa with Nairobi suites’, The Star, 16 June 2023