2012 saw City Lodge Hotels announce that it was acquiring a 50% stake in Fairview Hotel Limited in Kenya. The agreement sees City Lodge making its first venture into East Africa, with two successful hotels – the Fairview and the adjacent Country Lodge in Nairobi. Fairview’s two owners were appointed joint chief executives, and Dylan Rogers sat down with one of them, Daniel Szlapak, in Nairobi recently.
Q: Give me the summarised history of the Fairview.
A: My grandfather bought the Fairview in 1946 and my father ran it from 1955 until the mid-1990s. My grandfather bought close to 10 hotels and other properties, saddling the company with massive debt, and my father’s job was to operate everything and repay all the lenders. When my grandfather died, my father sold all but two of the properties – the Manor and the Fairview. In the late 1980s he sold the Manor, and at that time the Fairview was very much a 2/3-star property. The money from the sale of the Manor allowed my father, brother-in-law and sister to invest in the Fairview and turn it from a 2-star property into a 3/4-star one, complete with conferencing and great F&B. I returned from the United States in 2002, and for the next three years we all took the Fairview up another notch, redoing everything and along the way introducing the 3-star Country Lodge, next to the Fairview.
Q: How did you come to partner with City Lodge?
A: We actually asked them to join us in 2005, when we were about to build the Country Lodge. We were very impressed with their products, simplicity and value-for-money. They were so focused on their South African expansion that they declined our offer. We weren’t deterred and built the Country Lodge with hope that City Lodge would one day reconsider. They eventually did, and the plan is now to rebrand the Country Lodge as a Town Lodge.
Q: Why did you sell a stake in a family business, when you could have raised money from equity markets and gone it alone?
A: We needed more than just money. We wanted a partner who specialised in the limited services segment. There are a handful of companies in the world with this expertise, and for us, City Lodge was at the top of the list. Sure, we have lost some independence, but not too much.
Q: Town Lodge is a 2-star brand in South Africa. Are there plans to change the offering in East Africa?
A: Very little. It works pretty well the way it is.
Q: Will the Fairview be rebranded? Will you be creating more Fairviews?
A: No. It runs perfectly the way it is and we will continue doing exactly what we’ve been doing – improving the room and F&B experience, increasing the green spaces and focusing on attention to detail and customer service.
Q: How would you compare the grading systems in South Africa and Kenya?
A: I don’t look at either. All I’m interested in is our Trip Advisor ranking.
Q: Is Trip Advisor the most reliable and consistent grading system?
A: In the Nairobi market it is. When I travel, it is the first place I go to look at customer feedback and the rankings that are generated. I think the old star system will die eventually and is totally irrelevant for my customer’s purchase decision. They are not interested in a star rating – they want to know what other customers think.
Q: What are your thoughts on the state of the Nairobi hotel industry?
A: There is a lot of supply that has come in, and a lot more coming. It will be okay, as long as the market continues to grow. If we continue to see 6-7% growth, I think the pipeline of hotels will be absorbed. A lot of the old hotels need to renovate, so there’s a lot of capacity that has been resting on its laurels. Fairview is one of the few hotels to have invested tremendously and is essentially a new hotel, along with the old charm. I’m not overly concerned about the supply, although we’re not going to see rate increases like we have done. Rates will now stabilise. Occupancies will suffer for some, but as long as you have the right product in the right place, differentiated well, you should continue to do okay.
Q: Beyond Kenyan borders?
A: Our focus will be on Ethiopia, Burundi, Rwanda, Tanzania and Uganda. The market is large and the opportunities are large, but it’s a slow process.