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Companies &Industries

SEASONED INVESTOR

The reason for the success of Seasons


jumbo jet, a 747, Kiptunen said. With this big aircraft because of the short distances they were losing a lot of money. So we approached them and said: If we can form a small local airline with a smaller aircraft, you can dump your cargo here. They would then distribute the cargo across East Africa, and collect cargo from the region for onward dispatch by Lufthansa. Air East Africa was the name of the airline. Because he and the other investors did not have a lot of money, they signed a commercial agreement with Lufthansa to transact their East African cargo business, a lease agreement with a Texas company from whom they hired a 727 and a technical maintenance crew, and a lease agreement with the Director of Aerodromes at the airport to rent runway space for 5 years. They also rented a movable warehouse from a German manufacturer, similar to the kind used in Darfur. So we had an aircraft, we had a space, and we had cargo because Lufthansa was bringing it in. We also had the warehouse so we had access to the runways. And we operated for about a year without any problem, Kiptunen said. The credit squeeze that the country experienced in the mid 1990s however forced many airlines to withdraw from Kenya, including Al Italia, Air France, and Lufthansas passenger line. Soon Lufthansa cargo also found it unviable to continue operating in Kenya, and the smooth ight of Air East Africa was disrupted. When Lufthansa moved out everything dried up, Kiptunen said. There was no intra African cargo. It was all uni directional: from Europe or to Europe, so we found it dicult to operate. And our operational costs were high since everything was leased. Tip: Break the monopoly of reliance on one airline. In 1995, Kiptunen and his partners closed Air East Africa and formed a ground handling company called Aviation Services Kenya Ltd. Its role was to handle passengers, cargo, ramp services, and other technical services for foreign

Daniel Talengo Ole Kiptunen, proprietor of Seasons Restaurant and Hotels

Visionary entrepreneur overcomes various collapses to build a Sh4 billion hotels and restaurants empire
BY AAMERA JIWAJI

aniel Talengo Ole Kiptunen, proprietor of Seasons Restaurant and Hotels, has been described as a Maasai elite. It is a denition that suggests that the success of his hospitality franchise was handed to him on a silver platter. The truth is that Kiptunens story is one of the carefully considered risks of an entrepreneur. Threaded through his business ventures is his ability to visualise a future before it has
| Nairobi Business Monthly December

happened. Today, his business empire is worth over Sh4 billion, and he has 400 direct employees. For the last four years running, Seasons has ranked as one of the top 40 businesses in the country by Business Daily. Kiptunens professional career however started at Jomo Kenyatta International Airport, where he worked with various airlines including British Airways, KLM, Swiss Air and the national carrier Kenya Airways. Tip: By working for someone else you develop a much needed habit of discipline. In 1994, Kiptunen took early retirement as he nursed a strong urge to go on my own. The opportunity arrived through Lufthansa, which then operated a passenger and a cargo airline. They used to y a very large cargo aircraft, a

Seasons Elementaita

operators in Kenya. Success came when they landed a contract with the United Nations and the EEC, both of whom were using Nairobi as a base for their involvement in Rwanda, Somalia, and southern Sudan. But then the civil war in Rwanda came to an end and the country peacefully transitioned to the presidential leadership of Paul Kagame. And around the same time, a group of American nationals were killed in Somalia prompting the international super power to pull out of the war torn country. And so for a second time, Kiptunens source of business dried up. Tip: Unless you have local input in terms of customer base, it is difficult to operate by banking on external markets. Kiptunen cut his losses, and two business ideas came to mind both of which were based on the local people: supermarkets or restaurants. While supermarkets oered good potential, they required a heavy capital outlay and a new market entrant would have to compete with

the two big players, Nakumatt and Uchumi. Uch Kiptunen explained, Unless you K are known by the suppliers, you cant k make it. If you are going to buy things and s sell, you can only operate a small shop; not really a supermarket. Even now the people who operate supermarkets have very good lines of credit supplies. So if in that business you dont have that special relationship with suppliers you go nowhere, even if you have a lot of money. Tip: Some business ventures require a special relationship with members of the supply chain; without this, the idea is destined for failure. He chose to pursue the food and drink business and in 1999, started a restaurant in Eastlands. We took a building and we did it very well because I did a lot of homework. It was called Mima Centre for around 200 people and it was a hit from day one. It is still running. And that is how I landed in the hospitality business, smiled Kiptunen, with the condent assurance that a protable business venture brings. With the success of Mima Centre under his belt, Kiptunen returned to the airports which had proved unlucky for him in the past and

which he continued to view as his home turf. He opened a restaurant that targeted airport visitors who were dropping and picking up passengers, a group that had been thus far sidelined in terms of space and services. He also signed contracts with the customs and immigration departments, which guaranteed him a steady source of business. Three months down the line, the restaurant was booming. Tip: Explore the business environment and clientele that you are already familiar with But the fates frowned on Kiptunen once more, and in 1999, all security sensitive areas at JKIA were closed after Turkish terrorist Abdullah Ochalan issued a bomb threat against Kenya. My place was shoo! I had spent millions to put up a structure and all of a sudden, it was closed. I demolished the place, packed my things and put them in a warehouse, said Kiptunen. He pragmatically added with a laugh, Fortunately I had only lost part of my shirt; I didnt lose all of it. Tip: Do not let failure defeat you. Bruised but not defeated by the closure of his restaurant at JKIA, Kiptunen began looking for other opportunities in the hospitality industry. In the late 1990s, however, the restaurant trade was in decline but undeterred, Kiptunen
December Nairobi Business Monthly |

Companies &Industries

Seasons Narok

approached an Asian run restaurant on Kimathi street called Jacks. He took over the place, determined to focus on the needs of the customer and counter er the diminishing customer base. By tracing every process in the chain, n, Kiptunen was able to reduce prices s drastically. For instance, instead of preparing food by order from a menu, he worked with a ready made oering through a buet which required less energy and incurred lower energy costs. Shortly after, he took over Kangas Steak house at Uchumi House, which was also experiencing operational issues, and applied the same business concept. More than ten years down wn the line, both businesses are doing well. ell. Seasons restaurant was born, and today it is a successful brand associated with Kenyas hospitality industry. Looking back, it was a turning point in Kiptunens business ventures. Tip: Replicate a successful business idea; do not reinvent the wheel. Although the restaurants were doing well, Kiptunens entrepreneurial spirit would not rest and he wanted a business that oered a longer life span. With restaurants, the buildings are not
| Nairobi Business Monthly December

yours so you cannot guarantee a long life. My vision was to go into fully edged hotels but this was a big investment and it would require a large amount of ready money to allow purchase of land and construction of a building, he said. When road construction between Nairobi and Narok began, he anticipated the growth of the small Rift Valley town into a major transit point in the country. He bought a plot of land in Narok and began building Seasons Narok. Kiptunen said, Any business in a major tran-

sit point will do well, if you do it right and that is exactly what happened. By the time we nished construction of Seasons Narok, the road was nished and again, it was a hit from day one. Tip: In business, theres no guarantee that youll succeed. You need the ability to muster courage, and hold yourself to account when you have invested your life savings. With Narok doing well, Kiptunen noticed that Naivasha was attracting business trac from the capital city. However land in Naivasha was very expensive because people tend to do what everyone else is doing, and they dont see beyond what others are doing. So we looked around not because we wanted to look around but because we didnt have the money. Our money was limited we had to think very carefully about where to put it, he said. Tip: Availability of too much money T is often the source of business faili ure. If you have money you throw it into something before you second guess. High land prices in Naivasha pushed him to look further afield, and his gaze settled on Lake Elementaita, a lake about 15 kms from Naivasha that was on the highway and oered the pink beauty of amingoes. The land around the lake was occupied by small peasant farmers and Kiptunen brokered deals with each of them to secure 100 acres on which he then constructed the 70 room Lake Elementaita Country Lodge. Tip: in business you need the ability to see into the future: something which is of little i or no value now. o After Elementaita, Kiptunen acquired land in Maasai Mara, and has recently la completed construction of the 32 room co Seasons Maasai Mara on the western side Sea of the t park. His immediate future plans include putting up a 4-star hotel close to the prestigious Westgate mall, in order to attract business from the embassies dotted around the area; and a 3 star hotel in Embakasi to soak up lay over trac from the international airport. Tip: A business is only a business if it can be replicated several times. Business should not be personalised; it should be in a format that anyone can do, a system that runs automatically.