Perspectives of Hotel Investors on Kenya’s Competitiveness as a Tourism Investment Destination
Ndivo, Rayviscic Mutinda
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Kenya‘s social-economic development goals envisages an almost complete turnaround to her tourism industry including a number of high-capital investments. However, concerns exist as to the country‘s ability to attract such investment into her tourism industry with a number of reports showing the country as not being investor-favourable. In line with this concern, this study sought to explore the perspectives held by the hotel investors on the country‘s competitiveness as a tourism investment destination. The study was carried out in both Nairobi and the Kenya‘s coast circuit encompassing Mombasa Island, South Coast and North Coast. Further, the study adopted a cross-sectional survey based on an embedded study approach that involved 24 hotel companies operating 3 to 5 star hotels in Kenya, 5 investment consultancy firms, and 2 government investment promotion agencies. Primary data were collected using both interviews and unstructured questionnaires. Thematic data analysis was used to analyse the data. The identified themes were coded for further descriptive and inferential statistical data analysis. The study further revealed five main categories of factors cited by the three respondent groups as being determinants of the choice of an investment destination by the hotel companies in Kenya. These ranked as follows: (1st) Political and Regulatory factors (34%), (2nd) Economic factors (38%), (3rd) Marketing-related factors (28%), (4th) Destination resource endowment (21%), and (5th) Infrastructure (16%). In addition, the study found out that the most significant source of information for investment decision making was feasibility studies (cited by 95.8 % of all respondents). This was followed by the government reports on the performance of the tourism industry (58.3%) and the media reports from both the local and international media organizations (identified by 41.7%) of the respondents). The study found out that though the fully-owned subsidiary mode was the most preferred (75%), only a weak positive correlation existed between the mode and the local chain ownership type (R=0.19) and the local independent ownership type ( R=0.20). On Kenya‘s investment climate, the study found out that though the country was perceived as having strengths in key areas necessary to the success of hotel investments including a relatively stable political environment, government support for the sector, availability of qualified manpower and, infrastructure; the country was perceived as having the following key weaknesses: (1) High cost of doing business (25.5 %); (2) Political instability/uncertainty (15.3%); (3) Unfavourable business-related policies (13.6%); (4) Infrastructure (9.3%; (5) Corruption (9.3%); and (6) Insecurity (8.5%). In terms of the future investment plans, majority of the respondents (43%) indicated that they looked forward to establishing new hotel units within the country. The other major future investment plans were indicated as ―concentrating on the current business‖ (25%) and ―expanding operations into the East African region‖ (21%). The study further found out that the Kenyan Coast and Nairobi were the most popular hotel investment destinations. This study thus recommends that the government, together with other industry stakeholders, champion efforts geared towards attracting and retaining hotel investments. Specific attention should be focused on addressing the constraints limiting the competitiveness of the country as a tourism investment destination. More so, there is need for action to be taken to open up all tourism-rich regions in the country for both tourism and related investments. Further, deliberate efforts should be dedicated to ensuring the success of EAC integration as a means towards expanding investment opportunities for local tourism investors.