Implications of Supreme Court ruling on hotel control

Posted: August 15, 2013 in travel & tourism

nigeriaThe long-running battle of the regulation and administration of laws in the tourism sector of the economy has been laid to rest following the decision Monday by the Supreme Court in Abuja which unanimously ruled that it is only a State House of Assembly that can make laws on tourism or the licensing and grading of hotels, restaurants, fast food outlets and other hospitality establishments.

It would be recalled that the Nigerian Tourism Development Corporation (NTDC), then under its former Director-General, Otunba Olusegun Runsewe, had been engulfed in running battles with some state governments leading to some of them, like the Lagos, dragging the corporation to court, over right to legislate and regulate the sector in the country.

The NTDC which based it claims on right to control the industry on sections of the country’s constitutions believed that relevant sections of the constitution empowered the corporation administer laws affecting the industry to the point of registering, standardizing hotel laws and practices in Nigeria, just as the state governments posited that those laws had become null and void.

It would be recalled that Runsewe, during a stakeholders’ meeting organized by NTDC in 2011 in Lagos, under the theme: ‘Tourism and National Security,’ had explained that because there are international standards and best practices concerning the registration, grading and classification of hotels, these were better coordinated at the national level, even as he argued that ‘no state has the exclusive power to register or grade any hotel or hospitality establishment in Nigeria’.

“NTDC is the apex tourism body empowered by law to regulate, coordinate, and harmonize all tourism activities in Nigeria. It was to enable the corporation perform its regulatory function effectively, that the hospitality and Tourism Establishment (Registration, Grading, and Classification) regulation bye-law was enacted by the Federal Government in 1997.

“Section 1, Sub-Section 3 of the bye-law provides that no person shall operate a hospitality or Tourism establishment unless he has obtained and in possession of a current certificate of registration from the Corporation,” said Runsewe, who added:  “It becomes illegal for anybody or group to operate any form of tourism establishment without duly registering with the NTDC.”

However, following the Supreme Court ruling effectively stripping hotel regulations from the corporation, issues like the huge loss of revenue to the corporation in particular, and the federal government in general, as well the ability and capability of states to adequate regulate best practices and standards in the hotel industry now play up.

Note also that the battle waged by the then NTDC director apparently lacked the support by the federal government as the supervising Ministry of Tourism, Culture and National Orientation, was seemingly indifferent to the NTDC cause as the latter appeared resigned to whatever outcome the court may decide upon.

Last two months it would be recalled that Minister of Tourism, Culture and National Orientation, Chief Edem Duke, muted plans to review the laws setting up the Nigerian Tourism Development Corporation (NTDC) and others relevant agencies to meet present day realities in the tourism sector.

At a 2-day tourism forum in Abuja organized by the Federal Capital Territory Administration (FCTA) and The Federation of Tourism Associations of Nigeria (FTAN) tagged; Nigeria Tourism Investor’s Forum and Exhibitions, that was held from May 21 to 22, at the Ladi Kwali Hall of the Sheraton Hotels and Towers, Abuja, the minister observed that the move was necessitated by the present running battle between the NTDC and hotels on the issue of registration admonishing that it was best to settle out of court in the interest of all stakeholders and the tourism industry at large.

According to Duke, most of the laws which were promulgated during the military era specifically decree 81 of 1992 that empowers the NTDC, are no longer in tandem with contemporary developments.

The apex court in therefore, dismissing the case filed by the Attorney General of the Federation (AGF) and upholding the contention of the Attorney General (AG) of Lagos State Mr. Ade Ipaye, held that the Constitution of the Federal Republic of Nigeria, (CFRN) 1999 as amended, only empowers the National Assembly (NASS) to regulate tourist traffic, a term which does not extend to hotel registration or licensing.

It therefore declared valid both the Hotel Licensing Law of Lagos State (as amended) and the Hotel Occupancy and Restaurant Consumption Law of Lagos State, while the offending sections of the Nigerian Tourism Development Corporation (NTDC) Act were declared null and void.

With this ruling therefore, it is expected that states of the federation like Cross River and Akwa Ibom, that had also morally backed Lagos in the litigation would now fully capitalize on the new regime just as Lagos is expected to double its revenue base with another internally generated revenue (IGR) outlet now fully opened.

For the hoteliers, the case appears to be that of indifference as many had either prepared for the outcome or simply are not bothered about the any implication over the change of controlling rights.

Speaking during the media presentation of the Starwood improved Starwood Preferred Guest (SPG) programme tagged Triple Treats Offer, at the Sheraton Hotel Lagos, the Area Manager for Starwood Hotel & Resorts in Nigeria, Mr. Alexander Gassauer, said the concern of the hotel remains paying its dues to which regulatory organ of government.

“It doesn’t really affect us the way you are looking at it. Ours is to pay our taxes and other and allow whoever is controlling to do their job. We are not concerned about taking sides in this matter as it does not affect the way we here at Sheraton operate our business,” said Gassauer, who also doubles as General Manager of Sheraton Lagos Hotels.

Lagos presently hosts well over 70 per cent of the international hotel chains, with a combined total of more 2, 500 room keys with a 1, 500 contributed by indigenous brands and Abuja complementing with rooms that bring up the total room keys in Nigeria to nearly 7, 000 as at the first quarter of 2013.


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