Having experienced several years of stagnation, Kenya’s tourism industry was on a veritable bull-run.  One million visitors in 2002 increased to an estimated two million in 2007, accompanied by an increase in the length of stay from 8.5 nights to 12.1 nights (2006).  And that in turn meant a tripling of earnings, vitally important to the country’s goal of eliminating poverty.

In the late 1980s and early 2000s, Kenya had been bevelled by external shocks – the US Embassy bombing in 1998, the effects of the September 2001 attacks in the USA, and the attacks in Mombasa in late 2002.  The country, largely the private sector, did what it could to minimise the effect on the tourism industry, but it was not as effective as it could have been.

And then the boom between 2004 and 2007, with increased government contribution to promoting the country’s tourism product.  But in late 2007, Kenya’s international image, and by direct association its tourism industry, was severely damaged, this time by an internal shock, the civil unrest that followed the December elections.  Tourist numbers and receipts were down by one third in the first half of 2008, resorts were closing down, staff laid off, and it looked like Kenya had “had it”.

But this time the government led the attack, perhaps learning from the experiences of Egypt, so often affected by both internal and external shocks, and each time bouncing back with a vengeance.  Tourism to Egypt was devastated by various terrorist attacks in the 1990s, culminating in the Luxor massacre in 1997 when 58 foreign tourists were killed.  But in the relative peace thereafter, the country doubled the number of international visitors, by restoring confidence in the tourism product, with the general public and the travel trade.

Kenya has done the same, with massive efforts by the government to assure the world that the country is safe to visit.  The last travel advisory, warning US tourists not to travel to Kenya, was lifted in mid-2008, and the industry is expecting recovery to commence in earnest with the winter season this year.  The government has invested in promoting the country – a reported spend of well over US$10 million dollars from government funds, and a further US$10 million from the EU, just on marketing.

And at the same time, the local and global hospitality investment industry is expressing just that confidence that the government is seeking to engender, by announcing new deals in the country – Kingdom are investing in the refurbishment of their five hotels in the country, Radisson SAS are to manage a new luxury hotel under

construction in Nairobi, owned by Elgon Investments, and Kempinski and Accor are known to be eying up the market.

Tourists have, thankfully, short memories.  They are receptive to marketing messages extolling the virtues of a destination, even when that destination has been portrayed negatively by the same media as are now pushing its benefits.  Kenya has just spent over US$2 million on an advertising campaign on CNN – always the first into trouble spots like……Kenya.

How can investors rake the risk of developing new hotels and other facilities in Kenya, when the troubles at the turn of the year are just a few months old?  It is because of that short-term memory, that enables a destination such as Kenya, which offers experiences of great depth and impact, and cannot easily be replicated.  And it is because, throughout all the problems of the early part of the year, the Kenyan authorities were able to maintain economic stability, so important to investors – the probable recession that so many forecasters foretold has not come about, and forecasts of economic growth for 2008 range between 4 per cent and 7 per cent – not bad for a country with a 1 per cent decline in the first quarter of the year.

And investors are encouraged also by the realisation that Kenya has a large and growing domestic tourism industry, which is not susceptible to the threats which can so easily damage international tourism.  Kenyans are the largest users of hotels in the country by far, and also one of the fastest growing markets, increasing from 800,000 bednights in 2000 to almost 1.4 million in 2006.  Whilst international tourists bring much-needed foreign currency, a domestic tourist creates the same number of jobs from his or her overnight stay, and the demand is less seasonal.  This strong foundation of domestic tourism can significantly reduce investor’s risk.

Everyone lost money in the first half of the year in Kenya.  But tourism is a long-term investment, and it is a fact that challenging times are often good for the industry, forcing a reappraisal of product and marketing strategies, and producing a leaner, fitter set of players, ready for the next race.

Kenya, definitely a tourism investment destination of the future.

Trevor Ward

W Hospitality Group, Lagos

trevor.ward@w-hospitalitygroup.com