With its Indian Ocean beaches, abundant wildlife and vibrant cultural heritage, Kenya has long been a popular tourist destination. Tourism continues to be a critical industry for the country, although it has taken a number of serious knocks recently amid insecurity and travel advisories issued by several Western nations.

However, the sector’s long-term fundamentals remain extremely attractive and Kenya’s tourism and hospitality operators are well placed for growth in the medium term. Regional and domestic tourism and business travel were less affected by recent instability and operators are targeting these segments, pushing Kenya as a conference destination while international holidaymakers stay away. A concrete improvement in security, as well as investment in marketing and incentives for the industry, will help return tourism to its pole position among Kenya’s leading foreign exchange earners.

In Numbers 

Figures from the World Travel & Tourism Council (WTTC) highlight the importance of the sector to Kenya’s economy and the need to preserve numbers despite security concerns. According to the WTTC’s 2014 Travel & Tourism Economic Impact report on the country, the sector directly accounted for 4.8% of GDP in 2013, or KSh183.4bn ($2.09bn). Tourism’s total contribution to GDP was 12.1%, or KSh462.8bn ($5.28bn). Both contributions are forecast to rise by 2.9% and 3.1%, respectively, over the coming year. Projections for long-term growth are more positive, at 5.2% for both direct and total contribution over the next decade.

Tourism directly supported 226,500 jobs, or 4.1% of total employment in 2013, a figure expected to fall by 0.4% in 2014. The sector’s total contribution to employment, which includes indirect jobs, was 10.6% of the national workforce, or 589,500 jobs.

Navigating Waters 

These forecasts were made in early 2014 and took into account the Westgate mall attack in Nairobi in September 2013, in which at least 67 people died. However, the WTTC projections were calculated before a series of Western countries – including the UK, the US and Australia – warned against all but essential travel to segments of the Kenyan coast, some of which include popular Indian Ocean beach resorts, due to concerns over a spate of incidents on the north coast. A number of UK tour operators evacuated guests from the coast in May 2014 following a Foreign Office travel advisory.

Numbers fell across the industry in 2013, a result of slowing activity following the Westgate incident, as well as electoral uncertainty earlier in the year and an August fire at the international terminal at Nairobi’s Jomo Kenyatta International Airport. Foreign visitor arrivals decreased by 11.2% from an all-time high of 1.71m in 2012 to 1.52m in 2013. Annual tourism earnings also dropped by 2.1%, from KSh96.02bn ($1.09bn) in 2012 to KSh93.97bn ($1.07bn) in 2013, while bed nights occupied declined by 3.8% and visitor numbers to national parks also fell from 2.49m to 2.34m. There has been some disagreement over the change in visitor figures in 2014, with local media reports stating that internal data from Serena hotel chain indicates a larger decline than government figures suggest.

While the past 18 months have been difficult, Kenyan tourism officials remain upbeat. “We believe the sector will be revived. Safaris are doing quite well, there is an increase in regional and domestic tourism – Kenyans are really travelling these days,” Anne Musau, senior assistant director of tourism at the Ministry of East African Affairs, Commerce and Tourism (MoEAACT), told OBG.

Shoring Up The Sector 

In mid-July 2014, Phyllis Kandie, the cabinet secretary for the MoEAACT, created a special Tourism Recovery Task Force to advise the government on how to revive Kenya’s tourism sector. The team was expected to report back within three months with a strategy to overcome the challenges affecting the sector. Earlier Kandie had announced a “recovery programme” for the sector that included upgrading infrastructure and installing new boards for state-run tourism agencies, while in May 2014 President Uhuru Kenyatta announced the launch of a range of specific measures to help stimulate recovery. These steps included a $10 reduction in park fees for nonresidents, to $80, and a KSh200 ($2.28) reduction for residents to KSh1000 ($11.40).

Additionally, a value-added tax (VAT) exemption for air ticketing services by travel agents and a reduction in landing charges at Mombasa and Malindi airports was announced. Other measures include tax deductions for firms that pay their employees’ expenses if they vacation in Kenya. This is expected to add 25,000 Kenyan guests per month to the tourist population. President Kenyatta said that government strategies would seek to raise the number of guests to more than 5m, an ambitious figure given security concerns.

Priority Effort

Kenya’s long-term economic strategy, Vision 2030, had identified priority areas in tourism, including the development of resort cities, the rehabilitation of premium and underutilised parks, and the diversification into new products like sports and therapeutic tourism. Kandie has since emphasised efforts to target domestic tourism and promote the country’s destinations among non-traditional markets, such as China, India, the UAE, Nigeria, Morocco and other East African states. Some KSh200m ($2.28m) has been earmarked for short-term recovery measures, increasing marketing for the sector to include a global online reputation management campaign.

“As a body, our responsibility is to market Kenya as a tourism destination in the domestic region and on international markets,” Muriithi Ndegwa, managing director of the Kenya Tourism Board (KTB), told OBG. “There were a raft of other measures that were put in the stimulus package, but we believe that with those two [reduction of park fees and removal of VAT on ticketing] will especially help us in terms of the competitiveness of the product,” he added.

In addition to regular resources allocated by the government, the KTB also draws on the Tourism Fund and on industry contributions. KTB is behind a series of exhibitions and roadshows, which it runs in partnership with private sector actors who participate on a first-come, first-served basis via invitations extended to the sector’s umbrella organisations.

International and regional promotion is partially accomplished via marketing development representatives, who are located abroad. In August 2014 a delegation led by Kandie went to the US as part of efforts to reassure tour operators and stakeholders that Kenya was still a safe destination. The government is also hopeful that a new joint visa regime with Uganda and Rwanda will help to stimulate tourism, alongside reformed legislation permitting nationals from the three countries to travel between them with only a national identity card. To address the domestic audience, the government and industry partners are developing the Kenya Tourism Portal, which is intended to promote and manage bookings for domestic travellers.

More Needed

While VAT exemptions for air ticketing were granted in 2014, players in the industry have long been lobbying for wider VAT exemptions, blaming the 2013 VAT Act for crippling the industry by subjecting previously zero-rated goods and services to tax.

“The VAT on tour operators and on the service charge is not making it easier, it is making it harder,” said Jonathan B Seex, director of business development at the Tamarind Group, told OBG. “Some of the taxes make the margins difficult, especially when we’re not getting all the services we need. It would be better to have some tax relief for the sector so that the extra money can be used to improve the products.”

The MoEAACT said that the sector has been given some exemptions, including of import duties on materials used to build or renovate tourist facilities and on 4×4 vehicles for use by tour operators in parks. But the addition of a 16% VAT levy on tourism products – including park and conservancy fees, and on game drives – is widely opposed. Just weeks after the charge was added, the Mombasa County government announced that it would add a monthly KSh500 ($5.70) bed tax to all hotels and resorts, as well as a monthly KSh3500 ($39.90) tax on tourist vehicles. “We were exempt some time back and are now working with the Kenya Revenue Authority and lawyers to interpret the law,” Jackie Odudoh, a manager at the Kenya Association of Tour Operators (KATO), told OBG. “It is a huge burden and is affecting our business. We cannot match counterparts in the region and have to price up because of the VAT.”

Sector Framework

The tourism industry is governed by the 2011 Tourism Act, which revised older and fragmented policy and legal instruments. The act provided for the creation of a national strategy for the sector, which has been drawn up covering the 2013-18 period and includes targets such as promoting the country to non-traditional markets and improving the investment environment. “The ministry has come up with a National Tourism Strategy which guides all terms and activities,” said Ndegwa. “That strategy guides all aspects of the product, the pricing, the promotion … the entire marketing mix.” Tourism is also one of six growth sectors of the economic pillar of the Vision 2030 strategy, which aims to see the economy grow by 10% each year through 2030.

The MoEAACT oversees the Tourism Regulatory Authority. The authority is not yet active, but has been created with the goal of ensuring that tourism activities and services conform to the National Tourism Strategy. Getting the regulator – which relaunched in June 2014 – to work will help increase the number of classified beds in the country, and preserve standards of hotels and other facilities. Standards are now set across the East African Community, but there has not been a comprehensive regional assessment. “There was a small unit under the ministry that used to deal with classification and standardisation,” said Ndegwa. “We realised we had a gap, as no one could confidently say how many rooms we had … [and] how many were classified.”

Product development remains the responsibility of the MoEAACT, supported by various agencies like the Kenya Wildlife Service (KWS) and National Museums of Kenya, as well as the private sector. Financial support for product development comes from the Tourism Fund, which collects levies from the industry, and the Kenya Tourist Development Corporation, which operates as a development finance institution and focuses on providing project finance for tourism investments. The latter is particularly focused on developing additional beds by investing in four- and five-star hotels, renovating facilities and providing credit funding to potential investors. Private sector players are represented by a number of trade associations, including KATO, the Kenya Association of Hotel Keepers and Caterers, and the Mombasa & Coast Tourism Association. The different bodies are united under the Kenya Tourism Federation, an umbrella organisation that lobbies for a better business climate and coordinates security information via its safety and communication centre.

Key Products 

According to the KWS, over 70% of all foreign tourists to the country rank wildlife as their primary attraction. Kenya’s parks and reserves remain vital to the success of the tourism sector. They also attract domestic visitors – citizens and residents – who represent around 62% of annual visits and support the parks during the low seasons.

Wildlife reserves are divided into protected national parks and conservancies that are community- or privately owned. Under the Wildlife Conservation and Management Act, KWS can work with private sector investors to develop facilities or infrastructure within the parks. In line with Vision 2030, the KWS investment policy looks to “aggressively involve the private sector”, especially in “less visited yet scenic parks and reserves”. It is inviting investors to develop lodges, eco-lodges, cottages and luxury tented and star-bed camps on a build-own-operate-transfer basis.

Visitors to national parks and game reserves declined in 2013, from 2.49m to 2.34m, in line with an overall decrease in visitor numbers. Even though safari destinations have so far not faced violence similar to the incidents on the Kenyan coast and continue to draw domestic visitors. The effect this drop has had on wildlife conservation efforts is significant: conservancy and bed fees alone generated KSh50m ($570,000) in 2013, and these funds are used to pay rangers and finance community projects. With less money there is less protection for the animals from poaching.


Typically tourists spend the night in Nairobi before and after their safari, which has helped to increase the number of high-end hotels in the capital. Business travellers and conventions have also boosted the Nairobi hotel market. “The number of rooms in Nairobi is still low for a regional capital, but there is a lot in the pipeline,” said Seex. “The demand is pushing up prices – some of the new three- and four-star hotels are stabilising at surprisingly high rates.”

According to estimates from consultancy PwC, there are 17,500 rooms currently available across the country, a figure that is projected to grow to 19,400 by 2018, with a rise in the average room rate from $155 in 2013 to $163 in 2018. Occupancy rates are expected to dip but begin to recover by 2016-17. Across the country the government is seeking to add more than 30,000 beds as part of its wider tourism strategy. There are likely around 4000-4500 rooms of an international standard currently available in Nairobi.

Accommodation booking website Booking.com’s recent opening of a country office in Kenya is a reflection of their confidence in the sector’s potential. Nigeria-based online booking service Jovago.com is also looking to expand into the Kenyan market.

Hotel chains in particular have increased their investment in the capital, despite a slight decline in average room occupancy rates across the country from 42.3% in 2012 to 41.9% in 2013. New arrivals include the Kempinski, Best Western and Hemingways Nairobi, with the Radisson Blu set to open in late 2014, and InterContinental, Starwood and Hilton also expected to expand in Nairobi. “We are diversifying into hotels and accommodation,” said Seex. The company already manages the Tamarind Village Serviced apartments in Mombasa, and has another six projects in the pipeline that include mid-range hotels for business travellers, as well as short- and long-stay suites and residences.

However, bookings at the coast – long a popular option for Indian Ocean beach holidays, or beach-bush combination packages – have been down all year, and are unlikely to recover in the light of extended travel advisories. The UK now warns against all but essential travel to Mombasa Island, to a 20-km-long strip to the north and south of the island, and to Lamu and the surrounding area. Diani and Malindi, both popular beach destinations are out of the warning zone, but hotels there had occupancy of only 30-40% for the first part of 2014. Occupancy did spike over Easter weekend, which hoteliers put down to the support of Nairobi residents, but many in the industry have been posting losses running into hundreds of millions of Kenyan shillings and have warned of the inevitability of laying off staff if the situation does not improve. “They’re suffering a lot at the coast. Some of the larger hotels are managing by turning to conferences,” said Seex.


Kenya’s main tourism source markets – including the UK, US, Italy and Germany – recorded a drop in visitor numbers in 2013 over 2012. Europe overall, however, remained the main source market for holidaymakers to Kenya, with a share of 60.3%, followed by African countries at 17.2%. In 2013 the UK accounted for 18.5% of holiday arrivals, followed by Germany with 12.7%. Among Asian countries, India is the main market for Kenya, although the number of holiday travellers declined from 29,800 in 2012 to 20,900 in 2013. Similarly, the number of visitors from China – a source market that the Kenyan tourist industry hopes will help boost numbers – also decreased, from 41,300 in 2012 to 37,000 in 2013, although the number did start at a very low base just a few years ago. Kenya is eyeing 1m visitors from the East Asian nation by 2017 and plans to continue an aggressive marketing campaign targeting the country. Other non-traditional markets that Kenya plans to target include Russia, Middle East and Gulf states including the UAE, and other African nations.

Growing regional and domestic tourism will be important for Kenya as it struggles to deal with the fall-out of violent attacks and a slowdown in the eurozone. “It’s too volatile to go for international tourists at the moment,” Seex said. “Regional and domestic travellers are more the focus.” Bed-nights occupied by Europeans dropped by 8.9% in 2013 over 2012, against a decline of 2% by guests from African countries. In a notable increase, holidaymakers from Uganda to Kenya grew in number from 33,200 in 2012 to 36,100 in 2013. The continent’s emerging middle class, which now has more disposable income to spend on holidays, could be a key target market. According to Kandie, domestic travel in Kenya also increased by 4% in 2013.

Key Challenges

Despite its robust and established tourism industry, Kenya faces significant challenges in reviving visitor numbers in the near term. “One of the key things that we need to do is to ensure the safety of the local and the international visitors that come to the country,” said Ndegwa. “The government has done a lot of good to improve security. One challenge we have been facing is perception. We believe that it is now time for us to do a global campaign looking at raising the brand equity of the destination and also giving reassurances that Kenya is a good buy.”

Kenya’s tourism sector experienced a documented downturn after the violence that followed the contested 2007 election. The KTB’s post-election strategy involved launching reassurance missions to tourism operators in source markets and briefing the media, a strategy that they have replicated to manage fall-out from the terrorist attacks. Delegations visited the UK and the US in July and August of 2014, respectively.

Infrastructural challenges are also significant. Despite being an important regional transit hub and the home of one of Africa’s main airlines, much of the aviation infrastructure is outdated and overstretched. Although national carrier Kenya Airways regularly flies to 61 destinations across Africa, Europe, Asia and the Middle East, and ultimately aims to expand to 117 destinations, its hub, Jomo Kenyatta International Airport, is operating beyond capacity. With a capacity of 2.5m passengers, it handles approximately 6.5m passengers per year and traffic is estimated to grow at a rate of 12% per annum. The airport was further overwhelmed after a fire destroyed the international arrivals terminal in August 2013. Passengers now arrive through a temporary facility in the airport’s multi-storey parking garage.

This temporary terminal has passenger capacity of 2.5m and became fully operational in 2014, while construction of a much larger permanent terminal with capacity for 20m passengers is under way. The Greenfield Terminal is being built by several Chinese firms at a cost of $654m and should have 50 international and 10 domestic check-in points. The airport is expected to continue requiring ongoing investment.

Nairobi also remains notorious for its heavy traffic. Despite the construction of new roads around and into the city, the Mombasa Road remains almost the only route into town from the airport, a journey that can take up to three hours at rush hour. The country’s national road network also varies in standard and levels of congestion, and tourist destinations often lie at the end of lengthy drives on rough roads.

The Nairobi Mass Rapid Transit programme is expanding the rapid rail system and working to ease congestion in the central business district. Given the state of roads, the introduction of low-cost carrier Jambo Jet by Kenya Airways, which offers flights between the capital and other major cities including Mombasa and Kisumu, will help open up travel options for the middle class, including many who have never flown before.

Niche Areas

As visitors from Kenya’s traditional source markets to its traditional offerings decline, the country is seeking to develop other niche tourism options. Some of these will include cultural and sports tourism, bird watching, cave exploration and therapeutic tourism. In particular, Kenya is seeking to position itself in the conference market. In the International Congress and Convention Association’s 2012 city and country ranking, the country placed after South Africa as the second-most-popular destination on the continent for meetings, incentives, conferencing and exhibitions tourism. According to Kandie, Kenya had already hosted 31 international conferences in 2014 by end-April. Key venues include the Kenyatta International Conference Centre in Nairobi, which is one of the largest conference venues in Africa and booked some 60,000 delegates in 2012. The Bomas of Kenya, also in the capital, is set to be revamped into a venue that will cater to 15,000 delegates. There are plans to increase capacity with construction of the Mombasa Convention Centre, a 5000-delegate venue at the coast. The centre is a flagship Vision 2030 project, though no timeline has yet been set for its development.

One of Kenya’s strengths is its well-educated workforce with strong English-language skills. Critics have noted some institutions still need to modernise their curricula, but there are well-known training institutions in the country, including the government-owned Kenya Utalii College. The college trains about 1200 industry professionals per year and is a member of the UN World Tourism Organisation Knowledge Network. Its graduates represent about 20% of the tourism workforce.


Kenya’s tourism industry has been battered but not beaten by recent events. While it is unlikely that international tourists from traditional markets will return to 2011 levels until confidence in security increases, the sector’s marketing efforts should replace some traffic. Kenyans reliant on tourism are likely to suffer in the short term, but a transition to business travel and domestic tourism may mitigate these external shocks.