As international hotel brands race to secure a foothold in East Africa, a critical question is gaining urgency among stakeholders: Is Nairobi adding too many hotel rooms or positioning for the next phase of tourism and business travel growth?
Trevor Ward, Managing Director of W Hospitality Group, Nairobi had a development pipeline of approximately 20 new branded hotels comprising around 3 650 rooms in the first quarter of this year. About 80% of those rooms are under construction while 10 hotels, representing approximately 1 500 rooms, are expected to open in 2026.
“While Nairobi is a big market with various sub-markets, that’s a lot of new rooms for any African city to absorb,” Ward said.
The city has already experienced a significant influx of branded hotel supply. Approximately 2 000 new branded rooms opened between 2023 and 2025, contributing to reports of occupancy declines of nearly 10 percentage points and increased pressure on room rates.
Ward noted that these figures only account for chain-affiliated properties and exclude independent hotels that may also be entering the market.
Pressure builds
“Clearly, occupancies and rates will continue to be at risk as more and more rooms enter the market,” added Ward.
Yet he cautioned against viewing the situation through a purely negative lens. “Good or bad for whom?” he asked. “For investors, returns will be reduced or delayed. For consumers, more choice is good as are reduced prices.”
Rather than signalling a crisis, he believes the challenge lies in ensuring demand growth keeps pace with supply expansion. “The industry needs to work with government to increase demand to match the increases in supply,” Ward said.
For Michael Pownall, Co-Founder and Managing Partner at Valor Hospitality, the conversation should move beyond room numbers and focus instead on operational quality and long-term sustainability.
“The focus of smart capital has fundamentally changed,” Pownall said. “Investors are no longer chasing vanity metrics such as room counts. They are looking for resilient assets, sustainable operations and stronger long-term returns.”
According to Pownall, Kenya’s hospitality industry today bears little resemblance to the market that existed five years ago. Traditionally driven by corporate travel and safari tourism, the sector has become increasingly diversified. New visitor markets from the Middle East and Asia, growing regional travel and changing consumer preferences are creating broader demand patterns that support a wider range of accommodation offerings.
“The sector has become much more dynamic and resilient,” he said. “We’re seeing growing demand for lifestyle-led hospitality, flexible accommodation formats and mixed-use developments.”
Despite rising competition from other African cities, Nairobi continues to enjoy strong investor confidence. “Nairobi remains an undisputed heavyweight,” Pownall said. “The fact that the city continues to attract significant institutional capital and boasts a record development pipeline demonstrates the confidence investors have in the market.”
Long-term demand
Others within the sector argue that long-term fundamentals remain overwhelmingly positive. Håvar Bauck, Founder of HotelOnline, believes concerns about oversupply often overlook the broader trends driving tourism and business travel into Kenya.
“Hotel capacity in Nairobi has been continuously expanding for many years but so has demand,” he said.
Kenya’s tourism sector has recorded strong growth in international arrivals over recent years, supported by aggressive destination marketing and improved connectivity. The government has set ambitious targets to increase visitor numbers significantly by the end of the decade.
For Bauck, hotel investment should be viewed through a long-term lens rather than short-term market cycles.
“Hotel investors do not think short term,” he said. “Anyone saying Nairobi is overbuilding hotels is not looking at the long-term trends.”
Bauck pointed to several demand drivers expected to support future occupancy growth, including expanded airline connectivity, major conference infrastructure projects and Nairobi’s growing role as a regional headquarters location for multinational corporations, diplomatic missions and international organisations.
The city is also strengthening its position as a MICE destination, creating additional demand for hotel accommodation across various market segments. “Nairobi is becoming more important as a diplomatic and United Nations city,” Bauck said. “With that comes international organisations, businesses, consultants and entrepreneurs.”
Industry experts agree that future success will depend less on the quantity of hotel rooms and more on the type of products being developed. Pownall argued that oversupply only becomes problematic when developers build identical products targeting the same customer base. “If the pipeline introduces new product categories such as branded residences, lifestyle aparthotels or extended-stay concepts, it can actually expand the market by serving previously underserved demand.”
