Nigerian hotels growing amidst challenges prospects

Posted: July 24, 2017 in general
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Four Points by Sheraton LagosBy VICTOR NZE

Despite the mounting challenges confronting hospitality establishments in the country, the Nigerian environment keeps attracting more investors.

A recently-released HVS Research showed that Lagos, the business capital of West Africa will see up to 13 internationally-flagged hotels come on stream with additional 3, 244 rooms from between December 1 to January 1, 2019.

In addition, international hospitality firm, the BON Hotels, only last Monday announced the signing of its 12th hotel in Nigeria, further increasing the company’s presence and footprint in West Africa.

Its two new hotels, BON Hotel Lekki and the BON Hotel Elvis Wuse2, currently under construction are being built to international standards and specifications with the latest technology and facilities. BON Hotel Lekki, situated on the Lekki Peninsula, Lagos, is due to open in June 2018 and will provide a 4-star, international, 45-room hotel catering to the corporate and business market, the BON Hotel Elvis Wuse2, Abuja, a 4-star, 85-room, luxury hotel located in the heart of Abuja, primed for the business traveller, is due to open later this year.

The Hospitality & Gaming industry firm, PwC, in the 7th edition of its ‘Hotels Outlook: 2017-2021’ which was released penultimate week, forecast the hospitality market in Nigeria to be the fastest-growing from a revenue perspective over the next five years, with overall hotel room revenues hitting $517 million in 2021 from $261 million in 2016.

The report further indicated a 5.2 per cent recovery in revenue terms for the country’s hospitality market in 2016 alone.

“The hotel market in Nigeria rebounded in 2016 with a 5.2 per cent increase in total revenue. However, a number of projects in Nigeria have been delayed or postponed in the wake of the recent economic uncertainty. Nevertheless, there is still a lot of activity in the market for new hotels which will continue to expand overall hotel capacity,” the report said.

However, for those portfolios already on ground, the story is a never-ending myriad of challenges and obstacles in the form of poor infrastructure, multiple taxations, multiple regulatory bodies, absence of proper regulation and grading system, lack of government support, among many others.

The Hotel Owners Forum, Abuja (HOFA), the umbrella body of operators in the country’s capital, a region which hosts the second largest cluster of hospitality establishments in the country, after Lagos, has continued to raise the alarm over the plight of the hospitality sub-sector in the country.

Only last Monday, the body appealed to the Federal Government to provide a development fund dedicated to tourism and hospitality for private sector investors to help grow the sector, in addition to its earlier call on the authorities for an enabling environment for the tourism and hospitality sector to thrive and generate revenue for the country.

“If the Federal Government provides an effective and reliable Tourism Development Fund, dedicated to investors in the hospitality and tourism industry to access and improve the sector, it will go a long to help.

“The loan can be given at a single digit interest rate to genuine investors in the sector. The fund is absolutely necessary because presently, you cannot get loan from the bank; also even if you build a hotel, it needs constant renovation.

“Guests come into the hotel and stay for days, months and even years which lead to infrastructure decay; you need intervention fund to renovate and put them in perfect condition,’’ President of HOFA, Dr Chike Ezeudeh, said, Tuesday, in Abuja.

The HOFA chief while urging government at the centre to provide the infrastructure to grow the industry, stressed that it remains the sole responsibility of government to provide policies for the sector to move forward.

“Look at Kenya, Tanzania and other countries; they mainly depend on tourism and agriculture unlike Nigeria.

“Europeans go to tourist sites in The Gambia, Kenya, Tanzania, Egypt and others because there is an environment that enabled them to do so. But this is not so in Nigeria, rather, Nigerians usually visit tourist sites in other countries.

“This is because there is still room for improvement on our tourist sites to encourage the participation of the private sector. We are not saying government should put much money in tourism but do the needful through policies that will sustain the interest of the citizens in visiting tourism sites.

‘’With the population of Nigerians, we can capitalise on what we have internally and move the sector forward,’’ he said.

Nigeria Tourism, and in particular, the hospitality sector has potential to expand, which is planked on a vibrant travel and tourism sector, as a whole, according to Abiodun Sanni, a travel operator.

“The hotels across the country, whether indigenous of international, are suffering no doubt, but the positive forecast the industry is getting is largely due to the population of the country as well as its GDP, but nothing much to do with the level of infrastructure in the country or any standard grading system in the hotel industry, let alone a regulatory body. So now imagine if they get it right with those, it means by implication that the growth forecast will double or even quadruple,” he said.

On his part, the Director General of the National Council for Arts and Culture (NCAC), Otunba Segun Runsewe, a former boss of the Nigerian Tourism Development Corporation (NTDC) while reacting to the trend of state governments establishing hotels, pointed out what he termed ‘the mistake’ in government circles about locating hotels.

“People don’t visit a destination because of the five-star hotel you have, it’s because of the entire destination itself. You see, that’s the mistake we constantly make. Instead of developing the infrastructure of a particular tourist destination with a view to improving what is on ground, people just go straight to building a five-star hotel there, promote it as a destination and then hope that visitors will troop in. If we have been upgrading infrastructure and then allow the private sector operators to build their hotels, we would have gotten somewhere now,” Runsewe said.

Nigeria’s hospitality industry even as it is has the capacity to create millions of jobs for Nigerians, but a fully-functional one has immense potential to do a lot more for the country’s economy.

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