Category Archives: Serena

Nairobi Christmas Tourism Expo

The annual Christmas tourism expo (Getaway ’09 fair) fair was held at Sarit center last weekend. About 75 exhibitors were offering holiday packages for Christmas and the New Year in addition to 2010 rates. Christmas and Easter are the most expensive holiday months in Kenya with rates for 23rd December to 5th January and then in the first week of April 2010 sometimes more than double the low season rates that apply for other weeks over the year –

Some of the notable ones

Joint Marketing Initiatives: (i) The Laikipia Wildlife Forum had a booklet that promoted all the main tourist attractions and venues in the Laikipia area – including wildlife reserves, cottages, lodges, ranch houses, community properties and tented camps – in places such as Nanyuki, isiolo, maralal, lewa conservancy, ol-pejeta conservancy – and with destinations such as il-ngwesi community lodge (featured in Milking the Rhino – and costs 12,500 p.p or ~$165.), Sweetwater’s and Mt. Kenya safari club – brave considering the recent banditry in the area
(ii) Beautiful brochures by the Kenya wildlife services Kenya Wildlife Services promoting destinations like Kakamega national reserve, kisite mpunguti marine park, ol donyo sabuk park (about 85 km from Nairobi)

Island hideaways: Kenya is not known for its islands, but there are some exclusive destinations e.g. in Lake Victoria, Lamu and South Coast that hardly advertise locally. But present were Samatian Island Lodge and Roberts Camp both on lake Baringo, and Crater Lake in Naivasha from the Merica Group . For wildlife in Naivasha area, there is Malewa wildlife lodge and Kigio wildlife camp (both on private ranches managed by Kigio)

Chain Groups (i) Tourism giant Serena, which has made a lot of mileage thanks to Kofi Annan being their frequent guest, has 6,500 (~$87) p.p. full board, up to 22 December at either Mara, Sweetwater’s (mt. Kenya), Amboseli, Samburu, kilaguni (Tsavo) and mountain lodges which jump to 16,000 for last week of the year (Christmas week)

Voi Wildlife Lodge have three resorts located around Tsavo parks in Voi including the manyatta camp along voi river that has 24 en-suite luxury tents each with a private swimming pool. Special rate is 6,550 p.p (~$87) sharing.

Kenya Coast: All inclusive coastal resorts include Travellers Beach and Turtle Bay (which has numerous children activities, free water sports – windsurf, snorkeling, diving in Marine Park) , while Mombasa Continental has 8,500 half board all year round (no low or high season) and 2 night flying packages form Nairobi at a cost of 28,800 (~$385)

For the South Coast: it’s time to take an interest in south coast again because (i) several airlines now fly directly to ukunda airport) and (ii) there’s a new road being built from the Nairobi-Mombasa highway direct to kwale are – both of these mean that travelers to south coast can bypass Mombasa island traffic and the likoni ferry crossing, which can add considerable time to a journey

Church owned resorts churches now offer conference venues at destinations resorts; these include PCEA church who have Milele Beach at Mombasa and Jumuia Resorts (of the national council of churches of Kenya – with hotels in Kisumu, Nakuru, Limuru and Kikambala (north coast) that have low rates e.g. half board is 4,950 (~$67) per night at Kikambala, but no booze allowed.

Serena Copes with Kenya Tourism Dip

TPSEA (Serena) the only listed Kenya tourism chain had sales of Kshs. 3.2 billion ($40 million) and profit of 223 million (~$3 million) for the year ended September 2008 both down 12% and 54% respectively from 3.7 billion and 416 million in 2007.

2008 was listed as one of the worst years for Kenya tourism with some smaller hotels going under receivership, laying off staff and shutting for prolonged periods

Saved by Tanzania?: Serena was a beneficiary of diversification as the group integrated its east Africa operations in 2006. For comparison, in 2007 Kenya accounted for 2/3 of sales and profit, but in 2008, Kenya provided 59% of revenue and just 25% of profit, while Tanzania had 41% of sales (1.34 billion) and 75% of profit (167m)

Unfortunately there’s no breakdown of income of properties they manage in Mozambique, Rwanda or Uganda. Serena owns or manages 8 properties in Kenya, 6 in Tanzania, 2 in Rwanda (Kigali serena, lake kivu serena), 1 each in Uganda (kampala serena), zanibar (serena inn) and mozambique (polana serena)

Invest in tough times: At a time when some banks have sworn off new tourism projects, Serena is using the downtime in the sector to expand. Serena will invest 400 million in Jaja Limited a to develop properties in Nanyuki and Elementaita once it gets shareholder approval. Shareholders will also get the same 1.25 shilling dividend as for the year 2007

Mt. Kenya seen from Nanyuki

No beef: The Farmer’s Choice chain, a related company, supplied 26 million shillings worth of meats & sausages to Serena in 2008, down from 33 million in 2007

Regional diversification

Taking regional investments a step further – how are various local listed companies doing on the regional front? January 2008 showed that having a focus on Kenya alone could be an Achilles heel despite it being considered one of the strongest economies in the region. Various listed companies are making pushes in East and Central Africa – however many of these countries are all dependent on Kenyan access, hence it’s not really true diversification of political risk. In that sense, Olympia Capital, an NSE laggard may be ahead of its peers with its tangled Botswana and South African corporate moves.

here’s a recap:

  • CMC says regional sales are on target in Uganda and Tanzania (from ½ year results this week)
  • Diamond Trust has set its sights on Burundi (adding to Uganda and Tanzania) while many other banks have targeted Rwanda.
  • East Africa Cables attribute good performance to their subsidiaries in Uganda, Rwanda and Tanzania
  • KCB has subsidiaries in Uganda, Tanzania and S. Sudan (though it wrongly had the flag of Sudan on its’ annual report cover. These countries contribute less than 10% to their income and Ug had a loss of 49 million (setup costs) while Tz barely broke even with a profit of 0.2m in 2007. KCB opened in Kampala in November 07 and will open 6 more Ug branches in 2008, 4 new ones in S. Sudan in 08, and another 20 new branches in Tz over the next two years according to their annual report.
  • Kenol who after acquiring Kobil could be the first 100 billion shilling turnover company, have subsidiaries in Uganda, Tanzania, Rwanda, Zambia and Ethiopia. 80% of their sales are from Kenya, while the other countries contribute about 20%.
  • TPS East Africa acquired 8% of Serena Rwanda which includes Kigali Serena and Lake Kivu Serena. Of Serena’s 2007 sales of Kshs. 3.7 billion (~60 million), Kenya accounted for 64% and Tanzania 36%.
  • Total Oil Kenya has sister companies in Uganda, Tanzania Congo Rwanda so essentially remain a Kenyan company with 97% of their sales being local. They, however, complain in their 2007 report that other countries who should be buying from Kenya are (because of our tax regulations) buying offshore and shipping through Kenya instead.
  • Sameer Africa are looking for transporters to Somalia, DRC, Ethiopia, Rwanda, Sudan, Burundi, Mozambique, Zambia, Malawi Uganda and Tanzania for their products.

TPSEA (Serena) 2007 AGM

TPSEA aka Serena Hotels held their first ever (public) AGM, as the company was listed after the last AGM was held.

The company with with 15 properties (11 owned, 4 managed) is enjoying the ongoing tourist boom. (Sarova should hurry up and take advantage with an IPO while the sector is doing well). 64% of income is earned in Kenya, with improved returns from Tanzania and other properties recorded. But, though Kenya recorded an increase in tourists visiting, a significant number were conference tourists – whose and gains are only felt by Nairobi (not coast or safari) hotels

In a keynote speech, the MD mentioned that they have maintained profitability despite the appreciating shilling, noting that a weakening or the SA rand had provided significant benefits to the south African tourism sector.

He also mentioned that the expansion into the region would cushion the company from company specific risk. Through managing properties (they don’t own) in Rwanda and Uganda, they were able to increase awareness of the Serena brand at lower cost – and once those hotels are established and profitable then the group may bid for equity in them.

Future growth plans include Lake Nakuru, Laikipia, and southern Tanzania. The company has also invested in an energy efficiency program that will be completed this year.

The MD called on government to improve on infrastructure (roads) and security while he at the same time lamented that the environmental authorities (NEMA) had approved some lodge expansions that could harm environment and ecosystem.

Shareholders asked:
why company has high retained earnings & low dividend and, increased property investment costs: MD response was that tourism is a high risk business and it is important to keep reinvesting in hotels to maintain premier status and visitor preference. He noted that Kenya used to have four major hotel chains – and that block hotel and AT&H went out of business because they did not make such crucial investments to keep up. Serena must continually refurbish facilities, and must have ready cash since a lot of opportunities come up at short notice. Still, they were able to contain other costs (only 1% increase from the year before)
Serena a market leader? hotels in Nairobi do share information and this confirms Serena’s leadership in terms of (revenue per available room), while coast and safari circuit hotel statistics are not easily available – but going by the packages that tour operators put together confirm that Serena properties are marketed as premier packages
corporate social responsibility can shareholders recommend CSR projects to the company? Management said yes as long as projects are in areas where the company has properties. Shareholders can also get discount rates if they book through the Serena offices.

goodies: bonus share, dividend, and a lunch box (with roast beef slice, bottled water, apple & banana, yogurt, boiled egg, cake). I noticed some other shareholders boxes had juice & hamburger as opposed to my water & roast) and I gave my offered my boiled egg (can’t eat that) to a lady seated neat to me, who surprised me by giving me her yogurt – fair trade?

See: another past Serena AGM report.

Access Kenya IPO results

Access Kenya summary
Individual applicants: who applied for the minimum 5,000 shares get 900 shares, while those who applied for 25,000 get 4,000.
Institutional investors: that applied for the minimum 100,000 get full allocation, while those that applied for 1 million get about ½ that .

Serena expands to South Africa
Serena shareholders will this month be asked to approve creation of a South African subsidiary company

CMA reforms planned
The Capital Markets Authority has commissioned a consultancy to modernize & improve its operations by strengthening its legal and regulatory framework. Part 1 of the study will have the consultants evaluate the capital markets and central depositories acts, look at secondary market malpractices & sanctions, cross border listings & trading, methods of dispute resolution among others. In Part II, the consultants will come up with revised regulations that, based on the weaknesses identified in part 1, ensure that Kenya investor laws & regulations adhere to international best practices. This is part of the FLSTAP reform program of the Ministry of Finance and consulting firms can apply by June 13.