Syovata Ndambuki

According to the Tourism Performance Report 2024 by the Tourism Research Institute(Kenya), the world recorded 1.4 billion international tourists in 2024. 74 million of these international visitors came to Africa and in that year, Kenya welcomed 2,394,376 visitors.

Kenya’s numbers represent a 14.6% growth compared to the previous year. Since 2020, Kenya’s hospitality industry has been on an upward growth trajectory as international travel bounces back. 

Beyond international travel, domestic travel and tourism is also booming, creating a fertile ground for short stay rental investments in Kenya. While naysayers preach the doom gospel on Kenya’s short stay rental market, the bubble is far from bursting. In this article we explore how aspiring short stay investors can reap from Kenya’s vibrant market.

Table of Contents

Kenya’s Short-Term Rental Market: A Snapshot of Opportunity

Kenya’s appeal lies in its diverse attractions and economic positioning, regionally and continentally. As a tourism destination, Kenya boasts pristine beaches, wildlife reserves for the perfect safari getaways and an immersive cultural heritage. 

Key Growth Drivers for Kenya’s Short Stay Rental Market

• Rising international tourist arrivals.
• Fast adoption of technology which improves visitor experiences
• Growth of the middle class and disposable income which fuels domestic travel
• Infrastructure development
• A friendly regulatory environment
• The country’s economic growth and positioning as a regional economic hub which attracts direct foreign investments

Market Size and Visitor Demographics

According to the Tourism and Wildlife Ministry, Kenya’s tourism industry accounts for about 10.4% of the country’s GDP. The government’s aggressive and creative marketing has led to tremendous growth. Currently Kenya dominates the Safari industry, although South Africa provides stiff competition. The Kenyan coastline is also an important lifeline for the industry. 

Foreign investments in different industries have also boosted business travel, driving up demand for short stay rentals catering to professionals.

When it comes to the source markets for travellers coming into the country, the US leads with 12.8% of total arrivals. As of 2024, that is roughly more than 300,000 visitors.

Neighbouring Uganda and Tanzania are the second and third (respectively) leading source of visitors for Kenya. United Kingdom (UK), India, Italy and China follow closely.  The chart below shows data on the different types of visitors visiting Kenya based on their purpose of visit.

Top types of visitors renting short stay rentals in kenya

Understanding the kind of visitors renting short stays in Kenya is a great starting point for aspiring investors. Data from the Directorate of Immigration services shows that leisure or holiday visitors account for 44.2% of international arrivals. These types of visitors are the most common and are more likely to dominate bookings for short stays in Kenya. 

Business travellers come in second at 26.9% of international arrivals. This is roughly more than 600,000 people coming into the country for business or conference purposes. While travellers coming to visit friends and family account for 22% of arrivals, they are not likely to book short stay rentals in Kenya. 

Travellers in transit account for 4.2% and are likely to book short stay rentals near airports. Chart 1.0 below shows a detailed breakdown of the types of visitors coming into the country.

Chart 1.0 Data from the Directorate of Immigration Services, 2024

Prime Locations and Market Data for Short Stay Rentals in Kenya

Location is a paramount factor when investing in short stay rentals in Kenya. Unlike long-term rentals which follow specific urbanization patterns, short term rentals thrive in tourism and business hotspots with advanced or highly accessible travel infrastructure. Here’s a breakdown of top-performing short stay markets in Kenya:

Nairobi

Airdna ranks Nairobi as a great market with a 95% market score. With over 10,000 short stay listings on short stay booking platforms, Nairobi is an attractive destination for business travelers, local tourists and transit visitors. 

Most international visitors will land in Nairobi (Kenya’s capital city) first before proceeding to their actual destinations in Kenya. As such, the demand for short stays in Nairobi is relatively high. 

Airbtics places Nairobi’s average occupancy rate for short term rentals at 47% while Airdna estimates it to be 34%. These numbers vary depending on the exact location in Nairobi and the seasonality. A good number of listings achieve up to 60% occupancy rates annually. 

10,000

Nairobi has one of the most competitive short stay markets in Kenya with over 10,000 listings on short stay booking platforms.

The most popular short stay locations in Nairobi include, Westlands, Lavington, Lang’ata, Muthaiga, Gigiri and Kileleshwa. There are other smaller or emerging locations with great potential due to their strategic location. Some are close to the CBD or within the metropolis. Syokimau (within the metropolis) and Mombasa road properties for instance, are close to the Jomo Kenyatta International Airport which makes them perfect for transit visitors. Kitengela and other locations in Kajiado are gaining popularity for staycations.

When setting up a short stay rental business in Nairobi, consider proximity to airports, entertainment and tourism hotspots as well as accessibility and security. 

When it comes to the type and size of property, one bedroom units are in very high supply, accounting for 60% of the market supply in Nairobi. 

Coastal Towns (Mombasa, Diani, Malindi/Watamu)

Kenyan coastal towns are quite attractive to both local and international leisure travelers. The most prominent tourism destinations include Mombasa, Diani in Kwale county and Watamu in Malindi. 

These locations are accessible with established tourism industries and supporting infrastructure. Malindi town also has high potential for growth.

The coastal short stay market in Kenya is extremely seasonal and occupancy rates vary per season. Rates also rise and fall with the seasons. They can easily fall to lower than 30% and rise to impressive numbers during the peak months. The best seasons include March/April, July to August and December. February is considered the worst month for coastal short stays.

Key considerations when investing in coastal short stays include, proximity to beaches, accessibility, proximity to tourist attractions, amenities  and security.  

Naivasha

Naivasha is popular for weekend getaways, nature lovers, event attendees and safari tours. Naivasha is quite popular with local tourists but it is also attractive to international travellers. The town boasts countless tourism hotspots that provide varied experiences for travelers. 

Holidays, weekends and events (such as the WRC Safari Rally) make the best seasons for Naivasha’s short stays. 

Kisumu

Kisumu is a relatively small, emerging short stay market compared to established locations like Nairobi, Mombasa and Naivasha. The city is emerging as a popular destination for regional business travellers and local tourists. 

Other popular locations to consider include Nanyuki and Nakuru which are popular with both international and local tourists. Both towns have developed infrastructure and multiple tourism hotspots,

Buying the Right Short Stay Rental Property in Kenya

Kenya’s short stay rental market has experienced a boom, during and post -pandemic years. Although critics have, for a long time, predicted a bubble bust, as long as people are still travelling the demand for short stays will always be there. 

Success in Kenya’s short stay rental market depends highly on market research and whether a property can meet evolving visitor demands.

Location and Unit Selection

If buying a ready build property, prioritize location, amenities, and unique features and consider property size and layout. Currently, some developers in Kenya are specializing in building and selling aparthotel units designated for the short stay rental market. 

If building short stay rentals or extended stay properties  in Kenya, a lot of research is required to avoid common pitfalls. Key consultants to work with include valuers (for location and financial analysis), real estate market research experts and hospitality experts. Several international players have invested in Kenya’s short stay rental market and the competition is quite stiff.

Navigating Legal and Regulatory Landscapes

The short stay rental market in Kenya is mainly regulated by the Kenya Tourism Regulatory Authority. The Kenya Revenue Authority also comes into the picture where taxes are concerned. County governments may also form part of the regulatory framework when applying for business permits. 

In controlled or gated neighbourhoods, residents’ associations, developers and estate management companies can also set rules that affect the operations of a short stay. In some developments, short stays are prohibited, hence the need to seek clarity before purchasing a property with the intention of setting up a short stay business in Kenya. 

As the market grows, the regulatory framework is constantly evolving to keep up with emerging issues. It is important to consult extensively to ensure compliance with local laws. 

Overcoming Challenges and Maximizing Returns

Seasonality

Seasonality is a major challenge for short stay rental businesses in Kenya. There are predictable seasons such as annual off-peak and peak cycles. Short stay business owners overcome this challenge by setting dynamic rates. Short stay rental rates are highest during peak seasons and lowest during off-peak seasons.

There are, however, other unpredictable seasons that affect cancellations. For instance, during political upheaval, election seasons and post election seasons, cancellations may be higher than usual. Kenya’s political climate can be extremely unpredictable at times. 

Property Management

Kenya’s short stay rental market is relatively young. There is no doubt a short supply of professional short stay property management companies in Kenya. 

Pairing technology with property management services goes a long way in ensuring optimum returns. 

Competition

Kenya’s short stay market is quite competitive with more investors taking the short stay route. Invest in creative marketing and differentiate your property from the pool through unique amenities. 

Giving guests a unique experience can lead to great reviews and referrals. In addition, explore related business models to maximize returns. 

Security

Security is a major concern for a lot of short stay rental owners in Kenya. Insecurity takes many forms – from unruly guests committing crime in a short stay property to general security concerns in a given location. Diani, and Mombasa for instance are the hottest coastal towns but insecurity has always been a major issue in these towns.

Location choice is critical in averting security issues. Research extensively to ensure an area has a good history. Also, invest in thorough guest screening to avoid unnecessary risks. 

Conclusion

Kenya’s short-term rental market presents a wealth of opportunities for savvy investors. By conducting thorough research, selecting prime locations, understanding legal requirements, and implementing effective management strategies, you can unlock significant returns and contribute to Kenya’s thriving tourism sector.