Boston, MA -- (ReleaseWire) -- 03/06/2014 -- BMI has extended its forecast period to 2018. We continue to believe that the short-term outlook for Kenyan tourism remains clouded, although there may be scope for stronger growth in visitor numbers and revenue figures towards the end of the forecast period.
In light of what we believe will have been a very challenging 2013 for the local tourism industry, BMI has made a sharp downward revision to its forecasts for the value of Kenya's hotels and restaurants industry over the forecast period to 2018. We believe that the value of the industry will now decline by some 4% in US dollar terms over the coming five years, down from a prior forecast of 14% growth, on the back of smaller-than-expected rises in tourist arrivals and revenues and with 2013 likely to have proven a very low base from which the industry can start to recover.
For 2014 itself, BMI believes that the after-effects of the September 2013 Westgate mall terrorist attack will continue to undermine Kenya's struggling tourism sector, which was already reeling after political tensions in Q113 and the damaging fire at Jomo Kenyatta International Airport (JKIA) in August, at least until Q214. As such, although we forecast a slight rebound in tourist numbers in 2014, with further steady growth of around 3.75% a year to 2018, this would still indicate that tourist arrivals will not return to their 2011 peak over our forecast period.
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Beyond 2014, much will depend on the future evolution of the domestic security situation. Most analysts, including BMI, believe the Westgate attack was a one-off incident, with a low probability of a similar event happening again in the short term. Certainly, leading hotel chains remain optimistic on the medium-term outlook for Kenya, with Marriott Hotels' President for Middle East and Africa, Alex Kyriakidis, stating just after the attack that it was an 'isolated incident' that would be unlikely to have a long-term impact on Kenya. Marriott remains committed to building two new properties in Nairobi.
Moreover, Africa is increasingly the focus of the leading hotel chains identified by BMI, with Marriott having recently taken over South Africa's Protea Hotels. There are some indications that Kenya's own TPS Eastern Africa, which owns the Serena Hotels chain, could itself be a potential takeover target for international chains looking quickly to gain scale within the fast-growing African market.
BMI believes that Africa offers considerable long-term growth potential as a global tourism destination, with the UN World Tourism Organization (UNWTO) forecasting international arrivals to Africa to grow from 50mn in 2012 to 85mn by 2020, according to a January 2014 report in the Financial Times.
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