New exit plan for State owned hotels

March 8, 2011

, NAIROBI, Kenya Mar 8 – The Ministry of Tourism says it will table a new proposal before the Cabinet on how to divest the government\’s interest in the hospitality industry.

Tourism Minister Najib Balala said the ministry is working on a new mechanism for consideration over the privatisation process after the Cabinet halted the sale of the 13 hotels and lodges last year.

"We have two proposals of privatisation. One deals with the mature investments we have in some of the hotels where we are not the majority shareholder and should exit," Mr Balala said.

Among the hotels, the minister wants the government to exit from are the Hilton and InterContinental hotels, where it has a 40 percent and 33.8 percent stake respectively.

Other hotels are Golf Hotel in Western, Mount Elgon Lodge, Sunset in Kisumu and The Ark Lodge in Nyeri.

"We working on a way to get permission from Cabinet so that we can exit and earn money from the sale," Mr Balala said.

The government holds a stake in the hotels through the Kenya Tourist Development Corporation, which finances construction of hospitality facilities on concessionary terms.

Proceeds from the sale are to be ploughed back into KTDC\’s development kitty to fund other projects in the tourism sector.

For the other hotels, the Minister wants the government to get a strategic partner to re-invest in the establishments to make them competitive.

"Our plan is to consolidate all our shares to one big partner, get a strategic partner to manage the hotels so that they are up to international standards," he said.

Foreign and domestic investors have deepened their presence in the hospitality industry with the construction of top-end properties.

A number of lodges have also been built in the parks and national reserves as investors look to cash in on Kenya\’s attractiveness.

At the same time, the minister said the tourism Bill was set for its third reading once parliament resumes. He says the new law will go a long way in improving the country\’s competitiveness as a tourist destination.

"For the first time in over 40 years, we will have a new legal framework for tourism, which is proactive. We will restructure most of our institution making it an exciting time for tourism," he said.

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