Tourism &
Hospitality
Lawyer in Mombasa

Yes, but with important legal considerations. Foreign investors can own and operate hotels, resorts, lodges, tour companies and other tourism businesses in Kenya — the investment framework is generally welcoming, and the Kenya Investment Authority (KenInvest) actively promotes tourism sector investment. However, there are restrictions on land ownership: under the Constitution and the Land Act, non-citizens cannot hold freehold land — only leasehold interests of up to 99 years. This means a foreign-owned hotel must sit on leasehold land, or the investor must establish a Kenyan-registered company (which can hold freehold if majority Kenyan-owned) to acquire the property. For 100 percent foreign-owned companies, the leasehold route applies. Additionally, all foreign-owned businesses must comply with the Companies Act 2015 for company registration, obtain a Kenya Revenue Authority PIN and register for VAT, comply with foreign investment thresholds under the Kenya Investment Authority framework, obtain necessary work permits for expatriate management staff under the Kenya Citizenship and Immigration Act 2011, and comply with the Tourism Act licensing requirements. We advise foreign tourism investors on the optimal ownership structure — company formation, land acquisition, joint venture arrangements with Kenyan partners, investment incentives and ongoing regulatory compliance — from initial feasibility through to operational launch.

A hotel management agreement (HMA) is one of the most consequential contracts a hotel owner will ever sign — it governs the relationship between the property owner and the hotel operator (management company or brand) for typically 15 to 25 years. Key provisions that must be carefully negotiated include: (1) Management fees — base fee (typically 2-4 percent of gross revenue) and incentive fee (8-12 percent of gross operating profit), with clear definitions of revenue and profit, (2) Owner approval rights — which operational decisions require the owner's consent (budgets, capital expenditure above a threshold, senior staff appointments, major contracts), (3) Performance benchmarks — minimum revenue per available room (RevPAR) and gross operating profit targets that trigger the owner's right to terminate for underperformance, (4) Operating budget and capital expenditure — who approves the annual budget, what capital improvements are required and who funds them, (5) Brand standards — what the operator can mandate regarding renovations, furniture, equipment and technology, (6) Employment — whether staff are employed by the owner or the operator (with significant liability implications), (7) Term and termination — the initial term, renewal options, termination for cause, termination for underperformance and exit penalties, (8) Non-compete — whether the operator can manage competing properties in the same market, and (9) Dispute resolution — arbitration versus litigation, governing law and jurisdiction. We represent hotel owners in negotiating HMAs with international brands and regional operators — ensuring the agreement protects the owner's investment, provides meaningful performance accountability and includes commercially reasonable exit provisions.

Under Kenyan law, a hotel, resort or restaurant owes a duty of care to every guest and visitor on its premises — arising from both the common law of negligence and the Occupiers' Liability Act. If a guest is injured due to the hotel's failure to maintain safe premises, provide adequate warnings, train staff properly or take reasonable precautions, the hotel can be held liable for compensation covering medical expenses, loss of income, pain and suffering, and in severe cases, permanent disability or wrongful death. The standard of care is measured against what a "reasonable" hotel operator would do in the circumstances — and higher-rated establishments are generally held to a higher standard. Common liability scenarios include: slip-and-fall injuries at swimming pools, wet lobby floors or uneven surfaces, food poisoning or allergic reactions from restaurant meals, swimming pool drownings or near-drownings (especially involving children), injuries during hotel-arranged activities (water sports, safari excursions, boat trips), elevator and escalator malfunctions, fire incidents and inadequate evacuation procedures, and assaults or theft due to inadequate security. Defences available to the hotel include: contributory negligence by the guest, voluntary assumption of risk (especially for adventure activities), compliance with all applicable safety regulations, proper warning signage, and valid guest waivers (though their enforceability is limited in Kenya). We recommend a three-pronged approach: comprehensive public liability insurance, proactive risk management and safety protocols, and immediate incident documentation procedures that preserve the hotel's legal position from the first moment.

Service charge distribution is one of the most contentious employment law issues in Kenya's hospitality sector. Many hotels and restaurants add a service charge (typically 10 percent) to guest bills — and the question of how that charge is distributed to staff has generated significant litigation. Under the Regulation of Wages and Conditions of Employment Act and the Employment Act 2007, any service charge collected from guests must be distributed to employees — however, the precise distribution formula, eligibility criteria and timing are not specified in detail by the legislation, leading to disputes. Key legal considerations include: (1) the Employment Act requires that service charge monies are held in trust for the benefit of employees and not treated as the employer's revenue, (2) the distribution formula must be fair and transparent — typically based on a point system reflecting job grade, department and length of service, (3) management-level staff may or may not be included depending on the hotel's policy and contractual arrangements, (4) deductions from service charge for administrative costs, breakages or uniforms are legally risky and often challenged by employees and unions, (5) the Kenya Union of Domestic, Hotels, Educational Institutions, Hospitals and Allied Workers (KUDHEIHA) frequently negotiates service charge terms in collective bargaining agreements, and (6) failure to distribute service charge properly can result in claims at the Employment and Labour Relations Court for unpaid wages, trade union grievances and industrial action. We advise hotels and restaurants on drafting compliant service charge distribution policies, incorporating service charge terms into employment contracts and CBAs, and defending against employee claims arising from service charge disputes.

Any new hotel, resort or tourism development on the Kenya Coast requires comprehensive environmental approvals before construction can begin. Under the Environmental Management and Coordination Act 1999 (EMCA) and the Environmental (Impact Assessment and Audit) Regulations 2003, tourism and hospitality developments are listed as projects that must undergo a full Environmental Impact Assessment (EIA). The EIA process involves: (1) engaging a NEMA-registered EIA expert to conduct a baseline environmental study, (2) preparing a comprehensive EIA Study Report covering the project description, environmental baseline, potential environmental and social impacts, mitigation measures, an environmental management plan (EMP) and a decommissioning plan, (3) conducting public participation — including publishing notices in national newspapers, holding public meetings with affected communities and incorporating public comments into the report, (4) submitting the EIA report to NEMA for review and approval, (5) obtaining an EIA licence from NEMA (which may include conditions and requirements for ongoing monitoring). For developments near the beach, additional considerations include: setback requirements under the Physical and Land Use Planning Act 2019 (no permanent structures within 60 metres of the high-water mark in many coastal areas), compliance with the Wildlife Conservation and Management Act 2013 for developments near marine parks or conservation areas, approval from the Kenya Wildlife Service (KWS) if the development affects wildlife corridors, mangroves or turtle nesting sites, and county government approvals for physical planning, building permits and change of land use. Post-construction, ongoing environmental compliance is mandatory — including annual Environmental Audits submitted to NEMA, compliance with effluent discharge standards, solid waste management requirements and noise pollution limits. We handle the entire environmental approval process for tourism developments — from EIA coordination through NEMA submission to licence acquisition and ongoing compliance management.