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"&lt;p&gt;&lt;/p&gt;&lt;p&gt;JLL's Hotels &amp;amp; Hospitality Group (&amp;quot;JLL&amp;quot;) anticipates a decline in hotel revenues and hotel investment performance&lt;span lang=\"EN-US\"&gt; &lt;/span&gt;in Nairobi as supply is set to increase.&lt;/p&gt;&lt;p&gt;Nairobi is the leading hotel market in East Africa and the third largest is Sub-Saharan Africa in terms of overall demand and has a diverse market mix including international, regional and domestic business travel, a strong NGO sector, as well as a significant contribution from leisure travel. Nairobi has firmly positioned itself as the preferred regional corporate headquarter location in East Africa, which will continue to drive strong demand from business travellers. JLL forecast&lt;span lang=\"EN-US\"&gt;s&lt;/span&gt; this demand to continue to grow at 7% - 9% per annum over the coming five years, yet this will depend on a stable security environment and may not be high enough to soak up additional supply coming into the marke&lt;span lang=\"EN-US\"&gt;t&lt;/span&gt;.&lt;/p&gt;&lt;p&gt;&lt;strong&gt;&lt;em&gt;Mark Dunford&lt;/em&gt;&lt;/strong&gt;&lt;strong&gt;&lt;em&gt;, &lt;/em&gt;&lt;/strong&gt;&lt;strong&gt;&lt;em&gt;Vice President &lt;/em&gt;&lt;/strong&gt;&lt;strong&gt;&lt;em&gt;of JLL's &lt;/em&gt;&lt;/strong&gt;&lt;strong&gt;&lt;em&gt;Hotels &amp;amp; Hospitality Group,&lt;/em&gt;&lt;/strong&gt;&lt;strong&gt;&lt;em&gt; Sub-Saharan Africa&lt;/em&gt;&lt;/strong&gt;&lt;strong&gt;&lt;em&gt;, &lt;/em&gt;&lt;/strong&gt;&lt;strong&gt;&lt;em&gt;commented&lt;/em&gt;&lt;/strong&gt;&lt;em&gt;&amp;#58;&lt;/em&gt; &amp;quot;&lt;em&gt;Short term hotel investment returns will be negatively impacted by anticipated oversupply. With the saturation of the 4- and 5-star hotel markets in Nairobi we are now seeing developers looking to the budget hotel and serviced apartment segments for new opportunities, in addition&amp;#160;to the provinces.&amp;quot;&lt;/em&gt;&lt;/p&gt;&lt;p&gt;Announced new supply in the quality hotel segment equates to a further 4,442 rooms or 64% growth by 2020 with numerous new hotels due to open in the market. Of this announced supply growth JLL projects a realization rate for this pipeline of 65% or 2,887 rooms which represents a 41% supply growth. 2016 alone will see the opening of the Ramada Nairobi, Tune Hotel Westlands and Park Inn Nairobi amongst others, meaning a supply growth of 24%. This increase in supply follows on from a five year period of supply growth which saw a number of high quality new hotels enter the market including the Radisson Nairobi, Dusit D2, Kempinski Villa Rosa and Best Western Premier.&lt;/p&gt;&lt;p&gt;&lt;strong&gt;&lt;em&gt;Dunford says, &lt;/em&gt;&lt;/strong&gt;&lt;em&gt;&amp;quot;With the high level of new rooms coming into the market it is more critical than ever that the tourism and hotel sector stakeholders work together to grow demand through attracting new conferences, conventions and events, and tapping into new tourism markets.&amp;quot;&lt;/em&gt;&lt;/p&gt;&lt;p&gt;The area of Westlands, is expected to see the most significant growth in new hotel room supply moving from just over 500 keys to nearly 2'500 in the next 36-48 months making it the largest provider of hotel rooms. However, Kilimani and the CBD currently house the largest number of hotel rooms with 1,460 and 1,348 respectively.&lt;/p&gt;&lt;p&gt;&amp;#160;&lt;span style=\"line-height&amp;#58;1.6;\"&gt;According to STR Global, Nairobi hotels achieved an occupancy rate of 54% in 2015 which was down -1.1% on 2014 and an average daily rate which was stable at $143. As a result, it is anticipated that hotel revenues will drop with occupancy in particular coming under pressure. This will require existing operators to review their cost structures to protect profitability and potentially look for additional distribution channels and branding to boost demand.&lt;/span&gt;&lt;/p&gt;&lt;p&gt;&lt;strong&gt;&lt;em&gt;Dunford concludes, &lt;/em&gt;&lt;/strong&gt;&lt;em&gt;&amp;quot;Whilst the short term performance outlook for the hotel sector in Nairobi is negative, Nairobi remains an important market for hotel brands and investors alike who are looking for a presence in East Africa. In the face of the new supply coming into the city investors will need to take a longer term view. As the sector appears to be well capitalised we do not anticipate a high level of distressed hotel assets in the market.&amp;quot;&lt;/em&gt;&lt;/p&gt;"^^<http://www.w3.org/2001/XMLSchema#string>
<http://www.africa.jll.com/africa/en-gb/news/52/pressure-on-nairobi%e2%80%99s-hotel-performance-as-supply-growth-looms-according-to-new-report>