The Iconic Hilton Hotel to be Repurposed for Student Accommodations and Shops

The iconic Hilton Hotel building in Nairobi's city center, currently up for sale, might undergo repurposing for retail shops and student accommodation if a proposal by its owners is approved. The government and Hilton International Limited, who jointly own the property, stated that the building's utilization could shift towards other activities to adapt to evolving market conditions and occupational demands.

“The key investment characteristics that highlight the capital value of the property and the asset management opportunity presented by the former Hilton Hotel are the opportunity to configure the retail space to provide more floor area for additional retailers,” the pair announced jointly. 

Hilton Hotel in Nairobi CBD closed shop over a year ago leaving the building shut and unused. On Tuesday17 April 2024, both the government and Hilton International Limited individually called for expressions of interest from investors interested in acquiring the entire equity stake in the hotel building which is valued at Ksh2bn. 

In the latest financial disclosures for the fiscal year ending in June 2022, it was revealed that the government owns a 40.58 percent stake in International Hotels (Kenya) Limited, the company that owns the iconic Hilton Hotel, equivalent to approximately 5.8 million shares.

At present, the retail section of the building spans 28,458 square feet and boasts an 82 percent occupancy rate. Its tenants include prominent names such as Cooperative Bank of Kenya, Bata Shoe Company, Lintons Place Limited, City Walk Limited, G4S Limited, Healthy U, Baus Optical, and Goodlife Pharmacy Limited.

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“The current passing rents for the retail leases are paid quarterly in advance and currently generate approximately Sh91,980,914 per annum. Most leases are in the second year of their lease term with a provision for rent review in the second and the fourth year of the leases,” stated the teaser document.

The sales pitch for alternative uses of the hotel space includes options such as transforming the former hotel areas into student hostels, affordable living spaces, or flexible offices. Additionally, potential investors could opt to operate the entire hotel component as a three-star facility, banking on the anticipation of continued growth in demand for hotel accommodation in the city center.

The landmark property encompasses 333,839 square feet of built-up area, featuring 40 basement parking spaces, retail shops on the ground floor and mezzanine level, meeting/banquet facilities, and a 20-storey hotel tower comprising 287 rooms. While the hotel section ceased operations under a lease agreement by a joint venture company since December 31, 2022, the property remains equipped with hotel-related amenities, including food and beverage facilities, housekeeping sections, a kitchen, and a bar/restaurant.

The Hilton Nairobi commenced operations in Nairobi on December 17th, 1969. Upon its inauguration, the hotel stood as the tallest building in Nairobi, swiftly becoming a sanctuary for Kenya's foremost businessmen, leisure travelers, and government officials, all of whom became its devoted patrons.

Last week, the government and Hilton International Limited, with stakes of 40.58 percent and 59.42 percent respectively, announced the sale of the hotel as they sought to redefine its future. As of June 2022, the combined hotel stake was valued at Sh2.09 billion. Prospective investors will need to acquire the entire shareholding of both the government and Hilton International.

Situated at the intersection of Mama Ngina Street, Watalii Lane, City Hallway, and Simba Street, the establishment was established in 1969 and was operated by Hilton Nairobi Limited until its closure.

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