This series provides an update on the highlights on hotel construction activity in Kenya in the first quarter of 2015, including information on proposed hotel developments, ongoing construction and any changes that have taken place in the hospitality sector within the period. Our highlight in this segment is the Radisson Blu Hotel Nairobi.
Radisson Blu is the brand name for hotels and resorts operated by Carlson Rezidor Hotel Group. The Carlson Rezidor Hotel Group is a Belgian hotel company that boasts of three global hotel brands in 105 countries across Africa, Middle East and Europe. The group also has a rich portfolio of at least 1,350 hotels with over 180,000 rooms in these regions.
In 2009, The Rezidor Hotel Group announced plans to enter the East African hotel market. The move was informed by the fact that Nairobi is widely regarded and considered as the regional economic hub. At the time, the hotel was to be opened in 2010, but this was rescheduled to 2013.
The bigger picture
Back in 2012, a report launched by W Hospitality Group projected that in the 5-year period spanning between 2012 and 2016, there would be 208 new hotels with at least 38,000 rooms entering the African market. The projections for 2014 indicated that 57 hotels would join the market, bringing in at least 12,200 rooms. For 2015, the projections showed that there would be 30 new hotels with at least 6,000 rooms.
In 2012, the Kenya Tourism Board had also projected that by 2015, the number of tourists visiting Kenya would hit 3 million. However, as we shall see later, this has not been the case.
Earlier, in a February 25 2008 press release, Radisson Blu Hotels announced that the hotel would have 244 rooms. Situated in Nairobi’s Upper Hill, the luxury hotel now has 271 ‘spacious designer guest rooms’.
In addition to the rooms, the hotel has 12 meeting rooms and boardrooms, bars and restaurants. Other facilities at the development include a 590 square metre ballroom, standby generators, retail outlets and underground parking. The hotel also boasts a spa, a gym and a swimming pool.
The project consultants
The Nairobi-based architectural firm, Thomas Gronlykke Studio, are the architects of the Radisson Hotel Nairobi. Founded 24 years ago by a Danish architect, the firm has specialized in hospitality projects, especially hotels and luxury homes.
The quantity surveyors were Integrated YMR Partnership. The partnership has operated in Kenya for 30 years now and it is led by 5 partners.
The structural and civil engineer for the project was Struvil Africa Limited and the services engineer for the project was Maiteri & Associates.
The interior designer for the hotel was Lundwall Architects AB, a Swedish architectural and interior design firm formed in 1981. The firm has specialized in hotel planning and design. They have done a number of hotels for the Carlson Rezidor Hotel Group across the globe such as the Radisson Blu Hotel Kuwait.
The hotel team also comprised of Kitchen Consultants. This role was played by K3 Berlin Kitchens who have worked closely with Lundwall Architects in their hotel development projects.
Ecoplan Limited were the environmental consultants for this hotel development project.
The main contractor for the development was Parbat Siyani Construction Limited. The company is working together with the sub-contractors for the various building services such as Unicool who were the specialist sub-contractors in charge of heating, ventilation and air conditioning (HVAC) for the project.
The ownership and funding
Radisson Hotel Nairobi is owned by the Elgon Road Developments Limited. The company is a special purpose vehicle (SPV) for the hotel development. According to a report by Business Daily, the majority shareholding is controlled by Kenyan businessman, Michael Kairu at 58.7%.
In February, it was announced that the following private equity funds:
- Swedfund – holds 21.3%
- Finnfund – 10%
- IFU, a Danish investment fund – 10%
- Norfund – provided part of a 7.85 million euros loan from Afrinord
The law firm, Kaplan & Stratton, acted in the 7.85 million euro loan to the SPV for the construction of the hotel through Afrinord. Afrinord is a joint venture (JV) fund backed by three Nordic countries: Sweden, Finland, Denmark and Belgium.
Afrinord is an investment vehicle with a special focus on investment in hotel development projects in Africa. Established in 2005, the fund has had a previous investment in Africa: Addis Ababa’s SAS Radisson Hotel. The Radisson Hotel Nairobi is their second investment so far. Swedfund, Finnfund and IFU are the Nordic Development Funds (DFIs) that have collaborated under the Afrinord flagship with the main purpose of providing equity financing to both hotel owners and developers in Africa. Additionally, the fund also seeks to “lift business potential in selected African countries”.
The Carlson Rezidor Hotel Group also plans to open Park Inn by Radisson hotels in Nairobi. In 2011, then known as the Rezidor Hotel Group, the Carlson Rezidor Hotel group announced that this 126-room hotel would have 126 rooms. It was to be opened in December 2013. Park Inn Nairobi Westlands, will be situated in Westlands at the junction of Kilimanjaro Avenue and Elgon Road. It is scheduled to be opened early 2016.
There are also other hotels that were featured prominently in the media in the first quarter. We focused on the following:
Muthaiga Golf Club – Proposed 5-star Hotel
The Muthaiga Golf Club also announced plans to put up a 5-star hotel expected to be opened in January 2017. The project is expected to cost Kshs 5.8 billion (Approx. US$ 64.5 million). The club has set aside a 2-acre piece of land to set up the 200-room hotel. The club covers a total of 81.8 acres.
The management of the club invited global hotel chains to submit EOIs to procure the hotel through the arrangement of Design-Finance-Build-Operate-Transfer (DFBOT).
Hilton Garden Inn
The Hilton Worldwide’s 175-room hotel is scheduled to open in March 2016. Branded Hilton Garden Inn, the Kshs 2.3 billion hotel is still under construction on a 1.3 acre piece of land along Mombasa Road. The local franchise holder will be Modern Reliance Industries Limited which is associated by Nairobi’s businessman Noorali Manji. Manji is the developer of the hotel.
Globally, Hilton Worldwide owns and runs 12 brands. The hospitality company runs at least 4300 hotels and properties with a total of approximately 715,000 rooms. Since 2013, the company adopted the franchise model as opposed to building and owning their hotels.
The project is financed by Diamond Trust Bank (DTB).
Other local franchise holders for global hotels include:
- Simba Corp – Kempinski & Best Western
- Elgon Road Developments Ltd – Radisson Blu Hotel Nairobi
- AMS Properties – Park Inn Westlands
- Lonrho Group – easyHotels