Hotel & Restaurant News Kenya: Why Do Hotels & Restaurants Fail?
As Hotel Consultants in Kenya, we are passionate about meaningful, successful and sustainable hospitality, through our daily life, we come across hotels, restaurants and other such hospitality establishments, that close prematurely, on the fast lane to failure, or simply open but not just making it, and it certainly pains us to see the potential available and opportunity lost. Which leads us to why do hotels fail? Some Hotels & Restaurant establishment still open for business have actually retired, and some of these are known to you, think about it! when the hotel /restaurant doors opened, everyone seemed to notice it, and most likely you visited and experienced some services, or products and or you heard about it, but what happened, it no longer has the enticing feel in fact, now that you think of some of these former seemingly well to do establishments, it surprises you that you don’t even remember the last time someone mentioned to meet up there or spend the night. Your kids used to nag you to take them to that popular hotel or restaurant, today you all forgot about it, you can’t even go back there to refresh old sweet memories, This reminds you of some of those that opened and shut down, bought out or leased out, only memories remain. But why? Is it because the founding owner is absent? or operates behind the scene and unaware of the real issues? Did the competition swallow it? Did they stop marketing? Or did their standards just drop or did they have any standards to operate by? Was it because of a fire? Maybe it’s the economy? Or they couldn’t keep up with changing times? Someone said the staff drained it to the ground? The questions and theories are just many, the facts are real and surprisingly most of these hotels and restaurant failures were avoidable. The Hotel Industry in Kenya and as well in East Africa has been said to be highly profitable, to some however, it has been short lived or a dream waiting to come true, yet some under the same economic conditions have thrived through the years and still common household names. It’s astounding that a hotel is not making profits? The average cost to turn over a room, to keep it operational per day, is between 400/- and 2,000 Kes depending on Category and size. Let’s talk of the budget hotel scenario, If you’re paying 3,000 Kes a night, the approximate cost to turnover that room runs close to 400 Kes. That 400 Kes turnover cost includes cleaning supplies, electricity, and hourly wages for housekeepers, minibar attendants, front desk agents, and all other employees needed to operate a room as well as the cost of laundering the sheets.. Now compare that with an average room rate, and you can see why it’s a profitable business. The same applies to restaurants if you take the allowed % cost standards to revenue not making profits is unreal, so why do many fail anyway. To understand how to open a hotel or restaurant in Kenya / East Africa and keep it vibrant, with sustainable growth, it’s good research why many fail unreasonably. We have done this research for you taking one of the highest Hotel & Restaurant Population and leading in the highest tourism % in the world for this purpose ;- According to a post reference: Statistics by Wikipedia as quoted below “90% of new restaurants fail in their first year,”,[1] was an interesting statement made by Chef Rocco of a reality show called ‘The Restaurant.’ The number is very intimidating, yes, but hardly factual. “After the first year 27% of restaurant startups failed; after three years, 50% of those restaurants were no longer in business; and after five years 60% had gone south. It was reported by Dr. H.G. Parsa, Ohio State University. His research is titled “Why Restaurants Fail?” was published in the Cornell Quarterly (2005). At the end of 10 years, 70% of the restaurants that had opened for business a decade before had failed,”.[2] Although these numbers are still alarming, they are not as appalling as those stated by Rocco. The top six reasons why restaurants fail include no unique selling point, too large of a menu, all talent but no brains, poor pricing strategy, no marketing skill, and bad negotiation skills,.[3] This is where a Hospitality Consultant comes in to play. Another extract reads ; – American Express has estimated that 90% of restaurants fail in the first year. A study by Parsa, Self, King and Njite (2005) showed that the restaurant failures are in fact under 30% during the first year of operation, and although individual failure rates may rise by the third year of operation, they do not achieve the levels 3 reported by American Express. Other studies by Self (2004) using data from California have shown that restaurant failures are also less than 30%. The National Restaurant Association of US recognizes a 30% failure rate as the norm in the restaurant industry. Even the well established and commonly accepted 30% failure rate during the first year of operations is still unacceptable as it has significant economic impact. Restaurants are a significant part of American life. According to the National Restaurant Association (2009), total revenues for the restaurant industry exceed $580 billion with nearly 1,000,000 operating restaurants in the US; providing jobs for over 13 million people. The sizeable economic impact of the restaurant industry can be measured by the 4% contribution it makes to the Gross Domestic Product in the United States. In addition, the restaurant industry has been expanding at a steady rate of 2 to 4 % over the past three decade. In Kenya According to WTTC report on tourism in Kenya, The direct contribution of Travel & Tourism to GDP was KES183.4bn (4.8% of total GDP) in 2013, and is forecast to rise by 2.9% in 2014, and to rise by 5.2% pa, from 2014-2024, to KES314.1bn (4.7% of total GDP) in 2024. The total contribution
Tourism & Hotel Industry News Kenya: World Travel Awards
Embracing Tourism Growth Kenya Agenda, is our responsibility and recognizing great performers is also an encouragement to the participants efforts and contribution to Kenya’s GDP and Africa. World Travel Awards was established in 1993 to acknowledge, reward and celebrate excellence across all sectors of the tourism industry. Kenya Tourism Board has successfully defended its title as Africa’s Leading Tourist Board as World Travel Awards winners in Africa & Indian Ocean are revealed. The organisation was among the most successful entrants at the 2014 awards, taking the prize for the third consecutive year, while South African Airways took the trophy for Africa’s Leading Airline. World Travel Awards President Graham Cook added: “Each of our winners is a deserving champion. They will now move forward to the World Travel Awards Grand Final, which will this year take place in the stunning destination of Marrakech, Morocco. I look forward to welcoming them there.” “With tourism growing in importance all the time in both Africa and the Indian Ocean, it is an honour to bestow our prizes on some exceptional organisations”.Graham Cook’ The prestigious title of Africa’s Leading Game Reserve Brand was awarded to &Beyond, while voters recognised Mantis Collection as Africa’s Leading Boutique Hotel Brand, and Leopard Beach Resort & Spa, Kenya capturing the award for Africa’s Leading Spa Resort. Other well known winners were Kenya 2014 Africa’s Leading Tourist Board Kenya Tourism Board Africa’s Leading Airline – Business Class Kenya Airways Kenya’s Leading Beach Resort Leopard Beach Resort & Spa Kenya’s Leading Business Hotel Sarova Panafric Kenya’s Leading Car Rental Company Avis Kenya Kenya’s Leading Domestic Safari Carrier AirKenya Kenya’s Leading Hotel The Sarova Stanley Kenya’s Leading Hotel Brand Sarova Hotels, Resorts and Game Lodges Kenya’s Leading Hotel Suite Presidential Suite @ Villa Rosa Kempinski Nairobi Kenya’s Leading Inbound Tour Operator Twiga Tours Kenya’s Leading Resort Leopard Beach Resort & Spa Kenya’s Leading Safari Camp Brand Heritage Hotels Kenya’s Leading Safari Lodge Ol Tukai Lodge Kenya’s Leading Spa Resort Enashipai Resort and Spa Kenya’s Leading Tented Safari Camp Encounter Mara Kenya’s Leading Travel Agency Carlson Wagonlit Travel Kenya’s Leading Travel Management Company Carlson Wagonlit Travel Africa’s Leading Eco Hotel Sarova Whitesands Beach Resort & Spa, Kenya Africa’s Leading Eco-Lodge Sarova Shaba Game Lodge Africa’s Leading Beach Destination Diani Beach, Kenya World Travel Awards celebrates its 22nd anniversary in 2015 Winners will now move forward to the World Travel Awards Grand Final, which will this year take place in the stunning destination of Marrakech, Morocco. Are you in Hospitality You Can enroll your company see http://www.worldtravelawards.com/nominate . 4 days left. Seven Generations Management congratulates year 2014 Winners and nominees, Tourism growth in Kenya and East Africa is our responsibility for future generations, lets make the best at every opportunity. Lets promote tourism in Kenya and other East Africa regions : Kenya & East Africa Vote Today Hotels, Airlines, Travel http://www.worldtravelawards.com/vote