The Tourism ministry has linked the latest wave of auctions and business closures that has hit the hotel industry to poor corporate governance, shrugging off claims of market saturation.
Tourism Chief Administrative Secretary Joseph Boinnet said hotels are also grappling with a bad pricing model, causing them difficulties.
“It’s not that the industry is struggling. Business is good, although not at the level we want it,” the former police boss said on the sidelines of the opening of Radisson Blu Hotel and Residence Nairobi – Arboretum Park Lane.
The launch marks the group’s third hotel in Kenya, adding to Radisson Blu Hotel in Upper Hill and Park Inn by Radisson in Westlands in Nairobi.
“There is still a vote of confidence from investors because they know there is money to be made. Why would we open this one (Radisson) if there is a problem with the industry hotel or it is struggling?” added the former police boss.
Radisson Hotel Group adds 122 rooms to the market with the new chain, setting the stage for stiff competition in the exhibitions, conferences and meetings space, despite the distress hitting some of the players.
Last week, Nairobi Upper Hill Hotel was put up for auction, adding to the growing list of hospitality establishments sunder distress.
Similarly, South African hospitality group Tsogo Sun has also said it would close its Southern Sun Mayfair Hotel in Nairobi, adding that it “will not renew its lease and will officially cease operations on January 31, 2020 (last Friday)”, after operating for 10 years.
Responding to this, Mr Boinnet said the hotel was not shutting down but rather restructuring and developing a different business model, disputing Mayfair hotel’s interview with the Business Daily.
Jacaranda Hotel, which the late politician Njenga Karume established, was also on the list for auction, although the family of the late tycoon was last month given 90 days to mobilise funds to offset a loan owed to Guaranty Trust Bank.
Documents filed in court showed that Jacaranda Hotel took a loan of Sh250 million from the lender in 2014 and 2015.
“There is an issue of management. And some are having problems with their directors,” said Mr Boinnet.
“One of the concerns that the ministry is facing is that we tend to have products that are odd and outdated.”