Investors seek tourism funding to spruce hotels

Water rafting in Sagana. FILE PHOTO | SALATON NJAU | NATION MEDIA GROUP 

In Summary

• Demand rises to over Sh6 billion despite available cash standing at Sh800m in the current financial year.

By MATHIAS RINGA
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Investors are seeking over Sh6 billion from the Tourism Finance Corporation (TFC) to fund the refurbishment of their facilities and set up of new hotels.

Whereas some are asking for loans of about Sh3.8 billion to give their lodges and camps a
facelift, others are seeking Sh2.7 billion to construct new tourism facilities.

Areas being targeted are those that do not have modern facilities or are poorly served.

The challenge, however, is in facilitating the loans as the agency lacks adequate funds. It was allocated Sh800 million in the current financial year.

Chief executive Jonah Orumoi said they had so far received applications from 121 entities.

For the next financial year, the corporation had requested Sh2.5 billion from the national Treasury to enable it offer more loans to investors. Mr Orumoi did not say how much they were allocated for lending.

Of the 121, Mr Orumoi said, the State corporation has already approved the disbursement of loans to two investors who want to construct modern hotels. No figures were provided.

“A key consideration for loans is that the applicants must come up with innovative products which are beyond the normal provision of accommodation and catering,” Mr Orumoi told the Sunday Nation.

“We want  investors to introduce innovative products such as water fun parks, aquarium and amusement parks for guests so that they can stay longer,” he said.

Mr Orumoi said TFC targets to offer loans to investors who want to build hotels, lodges and tented camps in regions that lack such facilities to provide decent accommodation.

“There are parts of the country that have beautiful attraction sites but unfortunately lack accommodation, making visitors go elsewhere,” he said.

Tourism circuits that require more facilities include Western, Eastern, North Eastern and parts of the Rift Valley and Central.

Mr Orumoi said the Coast has more than 30,000 beds, adding that instead of adding more, they should introduce different products to beat the annual low season numbers.

He said investors should combine leisure with conference facilities to benefit from meetings, incentives, conference, exhibitions and events (MICE).

The corporation boss said the agency is set to disburse loans amounting to Sh800 million before the end of this financial year.

“At the moment, we are disbursing loans to investors who are implementing tourism projects with modern trends, adventure and fun activities,” he said.

Speaking on the sidelines of the first Tourism Finance Corporation stakeholders forum at Mombasa Beach Hotel on Thursday, Mr Orumoi said the agency would seek partners to supplement its loan offering to investors.

He said TFC would join hands with banks willing to offer affordable loans to tourism investors as part of efforts to encourage hotel refurbishments and introduction of new products.

The chairman of TFC, Mr Patrick Osero, said the corporation would support investors aiming to construct hotels in specific areas of the country which lack tourist facilities.

Projects targeted by the corporation include cruise boats in Mombasa and Kisumu, city bus tour vehicles, floating restaurants in Mombasa and Kisumu, zip lines, amusement parks and water fun parks.

“The focus of our new strategic plan is on expanding the productive capacity of the industry, improving returns from existing investments and attracting new capital investment,” he said.

Mr Osero said key areas include identifying and pursuing opportunities that create increased demand, and promoting diversification of tourism industry through opening of new regions.

Others are fostering investments in new products, addressing issues of seasonality and driving value over volume, and supporting enterprises in ways that improve productivity, profitability and returns.

But Kenya Association of Hotelkeepers and Caterers (KAHC) Coast branch executive officer Sam Ikwaye said the Sh800 million loan kitty is a drop in the ocean.

He said the government should fund the corporation to the tune of Sh10 billion to enable it offer more loans.

The KAHC official said investors at the coast require about Sh5 billion for them to upgrade their hotels.

“About 50 per cent of hotels at the Coast are in need of renovations as investors have been unable to refurbish them due to tourism downturn since 2014,” he said.

Following low business caused by the negative effects of terrorist attacks in 2014 and travel advisories issued by some Western countries, many hotels operated at a loss.