The hospitality industry in Nairobi is going through a tough season in business. Business travel remains low, NGOs have trimmed their budgets, conferences are fewer and city hotels that once thrived on corporate bookings are scrambling for a smaller pie.
At the same time, there is a noticeable rise in Airbnb and serviced apartment listings with leaner structures, cheaper maintenance and aggressive marketing.
They are capturing segments traditionally belonging to hotels.
The old playbook still has lessons.
Remember when airline crew contracts were the standard base business for the industry? When Nairobi had no airport hotel, everyone in town was fighting to secure one or two airline crews not for high margins but for consistent business. Airline crews padded the bottom line, and kept the lights on during low periods.
Redefining Strategy
In this new season, each hotel should redefine its base business, and here is how:
>>take a 150-room hotel for example. Rather than allow rooms stay unoccupied during soft periods, why not dedicate 10% of them to a budget or extended-stay category built around the Airbnb-style model?
>> To reduce waste and cost; housekeeping would be offered once a week and toiletries provided via bulk soap dispensers
>> For an edge over the AirBnB model, guests would enjoy complimentary breakfast along with the usual in-room perks; tea/coffee stations and fast Wi-Fi.
The Bottomline
At $70 per night –with attractive discounts for longer stays– gross monthly revenue could average $22,000–$25,000 from rooms that would otherwise sit unused.
One could close or reduce this inventory when demand returns but during slow months, this strategy is your financial cushion.
Worried about brand dilution?
If you are worried about diluting your brand, brand It differently and market it smartly to protect your main brand’s positioning. These rooms can be listed separately on Airbnb, Booking.com, or other platforms under a different category like ‘Urban Nights by Your Hotel Name’ to differentiate them.
Food for thought even as the industry strives to recover in business. Reach out to us today for innovative strategy sessions and planning to grow your hotel revenue.