Nigeria @ 52: Tourism prospects, challenges for Transformation Agenda

Posted: October 1, 2012 in travel & tourism

Issues bordering on infrastructure upgrade as well as the need for travel and tourism businesses and tourists alike to embrace sustainable energy in tourism practice in the country remain the major focal points in tourism sector’s development as the nation marks its 52nd Independence anniversary, Monday, October 1.

This is also as experts have included the reluctance of financial institutions in the country to partner with indigenous hoteliers with a view to financing the emergence and growth of indigenous hotel chains, in addition of facilitating this sector by facilitating the legal framework for the development of local hotels.

With international arrivals scaling 7, 000 daily, Nigeria is said to lead the sub-Saharan Africa region in terms of appreciable growth in the tourism sector of the economy. This figure, of course, is relatively boosted by the oil and gas industry in addition to marginal improvements of growth in the service sector.

The increase in international arrivals has provided the platform which has driven growth in the hospitality sub-sector of the nation’s economy by way of huge leap in volume of room keys as well as hotel construction pipeline in the country in the last half of the decade.

In the third quarter of 2011 alone, Nigeria attracted 3,937 rooms, according a release by Lodging Econometrics, out of Africa’s total hotel construction pipeline figures of 190 projects and 37,141 guestrooms and only came second to Morocco.

A study conducted by Lagos-based consultancy, W Hospitality Group, this year, revealed that Nigeria had almost 7,000 rooms under contract. New openings recently have included Rezidor’s Radisson Blu Anchorage, Starwood’s Four Points by Sheraton, Ibis and Legacy in Lagos, Sun International, Best Western, InterContinental, Golden Tulip, and many other international chains have hotels under construction there, including Accor, Hilton, IHG and Protea, the last named planning to increase presence in the country from 10 hotels to 16 hotels in the next three years.

Other groups hoping to enter the lucrative Nigerian market for the first time, and who have signed deals, include Kempinski, Mantis, Marriott and Wyndham. However, signed deals are one thing while actual activity is another, altering the picture somewhat.

Indeed, Nigeria is turning into a hub for the West African market for international hotel chains like Starwood, Golden Tulip, Rezidor, in addition to the growth and prospects for indigenous brands that are also getting a foothold on the domestic market and thus spreading to other states outside their traditional Lagos, Port Harcourt and Abuja locale.

However, it must also be admitted that the partial growth experienced in the tourism sector is not far reaching and all-embracing as other sections of the industry like the domestic tourism industry including the inbound leisure tourism market still ache for attention and improvement.

As observed by stakeholders in the industry, local tourists’ sites in the country are in dire need of attention as part of a general infrastructure facelift needed to attract tourists into the country for leisure since it is now obvious that the rising figure of international visitors streaming into the country are business travellers, which the newly opening hotel establishments are intent on cornering hence their orientation towards that market.

On the issue of infrastructure itself, as much as some have acknowledged an appreciable improvement in the power sector which the tourism industry itself leverages on to deliver affordable services in terms of reasonably priced room rates, the need to improve further cannot be over stated.

Last August, a survey conducted by a global corporate service group, the Hogg Robinson Group plc (HRG), had surprisingly placed Lagos, Nigeria’s commercial capital city as the city with second highest room rates for hotels among world’s leading business destinations.

Although it cited insecurity and brand loyalty by international guests as major criteria for the listing, experts believed the high room rates had more to do with cost of operation than those adduced by the survey; a problem which according to the experts runs deep in the hotel industry in Nigeria as a whole.

With rates averaging N60, 000 per night for single classic rooms, Lagos reportedly topped the room rates figures for hotels in Africa ahead of top tourists’ destinations like South Africa’s Cape Town and Johannesburg and Kenya’s Nairobi.

Speaking at the one-day second edition of the annual West Africa Business Travel Conference and Expo that ended in Lagos, recently, Mr. Amaechi Ndili, the Golden Tulip Hotels West Africa’s Chief Executive Officer, Mr. Christian Tomandl, the General Manager, Four Points by Sheraton, Lekki, Lagos, and Mr. Olatunde Oluloye, chairman, Institute of Hospitality, United Kingdom, all argued that the high room rates in the city had more to do with the absence or paucity basic infrastructure.

Ndili described the cost of operating hotels in Nigeria as ‘astronomical’, adding that some 3-star hotels in the country were simply operating as 5-star hotels in terms of running the costs.

“Hotels in Nigeria are unintentionally pricing themselves out of the ordinary Nigerian’s reach by operating 3 star hotels at the price of 5 star hotels and it may not necessarily be their fault. It is the economy. The cost of running hotels in Nigeria is astronomical what with cost of electricity generation and other amenities and facilities.

For Oluloye, the issue is complicated further as it negatively impacts on the system of grading the hotels in Nigeria as, according to him, when some 3 star hotels run as 5 star hotels it becomes an issue for the grading system.

“The cost of running a hotel in Nigeria is such that some clients now start to question the rationale behind spending $300 for a room in the country when less than half of that amount can guarantee you similar services or even better in Ghana or Gambia. And because these clients are lodged here they expect to get such services commensurate with the star rating you have given to yourself,” Oluloye stressed.

On his part, Tomandl, noted that the challenges of operating a hotel business in Nigeria were unique, adding that the high cost of providing basic amenities for the guest impacts negatively on the room rates charged, and may continue in that direction unless there a big lift provided by the government by way of improvement in infrastructure for the industry and business generally to heave a sigh of relief.

In addition to the problem of power, other hoteliers operating in the country have at various times also pointed out other challenges encountered in running businesses which they further describe as unusual and which must be tackled for tourism to truly grow in Nigeria.

Outgoing President and Chief Executive Officer of the global hotel chain, the Rezidor Hotels group, Mr. Kurt Ritter, recently, during the official opening of the Radisson Blu Anchorage Hotel, Victoria Island, Lagos, noted that one of the major disincentives faced by international brands wishing to invest in Nigeria, in particular, was the absence of any benchmark system for the hospitality industry.

“The problem in seeking to expand your brand in a territory like the sub-Saharan Africa and even to a large extent Africa as a whole is that there is no benchmarking system where an operator can use to either rate his own performance in the industry and project the future for his business or even use in evaluating his establishment,” said Ritter.

According to the hotelier, the problem of absence of benchmarking was only a part of the challenges faced by prospective investors, which he said, explains why international brands are hesitant in expanding their reach into this part of Africa.

The Rezidor chief then proceeded to list further challenges confronting investors in the hotel industry as cultural differences, lack of proper legal frameworks to cover and protect investments, bureaucratic bottlenecks encountered by investors in obtaining permits and clearances to operate.

“Then there is also the dearth or rather insufficient number of experienced and skilled professional who can effectively manage these establishments to international standards and also the lack of information which I pointed out earlier as part of the benchmarking system,” Ritter stressed.

Ritter further noted that Nigeria and Africa in general were replete with financial institutions who drag their feet when it comes to long-term financing or loans and facilities for investors.

“Here banks refuse to finance projects in the long-term, which is a problem for investors seeking funds to execute their projects. This means that investors have to look elsewhere for support and this of course will to a large extent determine citing for their projects,” he said.

However, rising to the challenges of doing business in Nigeria, the federal government as it celebrates the country’s 52nd Independence anniversary could be said to be rising to the challenges with not just the improvement in power supply particularly to the manufacturing and service sectors, but also seeming positioning the country to play the politics of the business by way of attracting major events of the industry players to the country.

This in addition to coming up-to-date with policies and programmes of the international tourism community by way keying into these projects to bring local industry practitioners at par with their foreign counterparts.

Last month at the media presentation of the scorecard of President Goodluck Jonathan administration contained in a new book, titled: Sure and Steady Transformation (Progress Report of President Goodluck Jonathan’s Administration) as well as the unveiling of a website for data on the administration’s projects,

Special Assistant to the President on Public Affairs, Dr Doyin Okupe, noted that the improvement in power supply was a major foundation for the success of the government’s Transformation Agenda.

“It is now an unarguable fact that this government is delivering on its promise of power to the people; that is the truth. It is incontrovertible. When the opposition now wants to speak they must now find something else to talk about. It is no longer reasonable, sensible, logical, to talk about performance in the area of power. It simply doesn’t make sense. There now an increase in supply from the NIPP which had not been working.

“President Jonathan declared an emergency in the power sector some nine months ago and it is bringing in fruits.. I am informed that Nigeria will hit an all-time high of about 7, 000 megawatts of electricity generation; the first time ever in this country for a government that came in with just under 2, 000 megawatts. The transformation agenda is obviously on course and the president as far as I am concerning is winning the race. Manufacturing is coming back, infrastructure lift is being seen, the transformation is on course,” Okupe stressed.

Recall also that Nigeria in June this year hosted the United Nations World Tourism Organization [UNWTO]’s 53rd meeting of the Commission for Africa [CAF] summit, a regional meeting for African Tourism Ministers, in Calabar, the Cross River State capital, with the UNWTO Secretary General Mr. Taleb Rifai, other principal officials from its headquarters in Madrid, Spain, top government officials from the participating countries as well as state governors and stakeholders in Nigeria, all in attendance.

The summit under the theme; Responsible Tourism: Opportunities for Women and Youth, had nearly the all 54 African countries and territories that are affiliate members of the UNWTO in attendance.

The Minister of Tourism, Culture and National Orientation, Chief Edem Duke, who was at UNWTO headquarters in Madrid, Spain, for the executive council meeting of the global tourism monitoring organisation noted that the ‘opportunity to host such an important, continental tourism ministers’ session will bring immense benefits not only for the industry but also for the country, adding further that the hosting of the regional tourism confab will afford the country the opportunity to redefine its image, showcase itself as a place for conferences and exhibitions with warm people and clean environment.

On the strength of the recently-concluded World tourism Day (WTD) celebrations on September 27, which global theme was; Tourism & Sustainable Energy: Powering Sustainable Development, Duke, it would be recalled used the occasion to enjoin stakeholders and practitioners alike in the country to avail themselves of the opportunities put in place by the federal government in the area of sustainable energy in the sector with a view to keying into them so as to advance its application in tourism.

Although some observers say the call is rather premature considering the level of Nigeria’s infrastructure development, however, attempting to position the industry’s players on track for long term policy framework considerations is not considered a bad move.

“It’s true we do not even have enough of the resources to now consider alternatives to those resources which are rather expensive, but then again we can also put that on the front burner when we do our projections for the future. We would not be caught unawares anymore. We thank the minister for the hindsight but first let us attain maximum or near maximum regular power supply. That is very important for us for to break even,” said Mr. Audu Terfa, a Kogi state-based hotelier.

According to the UNWTO, the theme of the World Tourism Day celebration for this year is in recognition of the fact that tourism has remained one of the world’s largest economic sectors which has taken important steps towards the future by improving energy efficiency and increasingly using renewable energy technologies in its operations.

“These steps are creating jobs, lifting people out of poverty and helping to protect the planet.   This year, UNWTO is inviting everyone to visit the ‘online energy school’ as part of Hotel Energy Solutions. It is a UNWTO-initiated project designed to help hoteliers cut their carbon emissions and costs. Tourism has to adapt to the conditions of climate change by reducing its emissions of hothouse gas, which at present represents 5 per cent of the total emission. However, tourism not only contributes to global warming, it is also a victim of it. Tourism is leading the way in some of the world’s most innovative sustainable energy initiatives,” reiterated Duke.

  1. Nice! very informative…

  2. DE-TOURIST says:

    wish they the tourism authorities themselves would read and understand this. that is if they’re even ready to change.

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