Serena Hotels in $20m deal with French fund Proparco

Wednesday August 26 2015

Proparco CEO Claude Périou (left) and TPS

Proparco CEO Claude Périou (left) and TPS Eastern Africa MD Mahmud Janmohamed at the Serena Hotel in Nairobi on August 24, 2015 after signing an agreement for a $20 million loan. PHOTO | SALATON NJAU | NATION MEDIA GROUP

By VICTOR JUMA

TPS Eastern Africa, the owner of Serena Hotels and Lodges, is set to receive a $20 million loan from French fund Proparco to refurbish and expand its properties.

The eight-year loan will fund capital expenditures over 24 months starting next year.

“Proparco and Serena Hotels continue to build on their long-term relationship and are proud to have been able to play a leading role in the growth and development of the East African region,” the two institutions said in a statement.

The TPS managing director Mahmud Janmohamed said most of the cash will be used in Kenya, including on expansion of Nairobi Serena Hotel which is estimated to account for 28.8 per cent of Kenya’s room nights.

New conference and banqueting facilities will be build on the property that will also see the refurbishment of bedrooms and public areas.

TPS will also make additional investments in its other properties in the country. The company has properties in major tourist locations including the Coast and Maasai Mara.

The Nairobi Securities Exchange-listed firm will also add 32 new bedrooms, food, beverage and meeting facilities at its Kampala Serena Hotel over the period.

The Dar es Salaam Serena Hotel is scheduled to undergo refurbishment and extension of the dining areas, spa and public areas starting January. The Proparco loan is the latest of joint ventures and financing deals that the French fund has signed with TPS.

The institution holds a 5.98 per cent stake in TPS besides additional stakes in the hotel operator’s subsidiaries in Uganda (Kampala Serena) and Tanzania (Dar es Salaam Serena Hotel).

Successful collaboration

“Our successful collaboration with Proparco… goes back to the redevelopment of the then Nile Hotel in Kampala which is now the Kampala Serena Hotel,” Mr Janmohamed said.

“Proparco joined the project as equity partners and lenders… the loan has been fully repaid and Proparco continues as an equity partner.”

Mr Janmohamed said the new investments — despite the current challenges facing the local tourism industry— will position TPS to grow its market share.

The tourism sector contracted 7.5 per cent in the first quarter compared to 14.1 per cent in the same period last year, marking the fifth consecutive quarterly decline.

The continuous under-performance of the sector has been attributed to insecurity concerns especially in the coastal region and negative travel advisories issued by some key European source markets.

The bed occupancy rate in coastal beach hotels is estimated to have shrunk by 21.9 per cent during the review period.

Mr Janmohamed said Nairobi’s corporate travel market held up better compared to the leisure segment which has been particularly affected by the travel advisories.

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