The Nigerian hotel market is beginning to rebound, with positive outlook for the last quarter of 2017 after a tortuous 2016 and first quarter 2017 which witnessed an unsustainable occupancy rate of below 30 percent across board, a development occasioned by the economic recession.
With an average of 55 percent occupancy rate that has been sustained over the third quarter of 2017, hoteliers are optimistic that the positive outlook would improve in the coming months, as more business activities, corporate and social events are expected in the last quarter of the year.
Furthermore, a number of hotel projects in the pipeline that were delayed or abandoned in the wake of the economic downturn are likely going to be restarted soon, as investors see the economy recover gradually and hotel occupancy and revenue improve.
Already, top hotels in Abuja and Lagos are becoming fully booked till November for events, as the likes of Eko Hotel and Suites, Transcorp Hilton Abuja and InterContinental Hotel Lagos, are fully booked.
Jimoh Akile, MD, ValuePoint Hospitality, and tourism lecturer, observed that average room occupancy is likely going to stabilise at about 65 percent for the rest of the last quarter 2017 due to the increasing bookings, especially from the domestic front.
Akile attributes the improvement so far in the hotel market to the return of international visitors who had left the country in droves, in the wake of the recession. He says one positive impact of the recession is the boost in domestic tourism, which saw a growth of about 4 percent and over 12 million Nigerians traveling more within the country in the last 12 months.
Akile further observes that the passing of the budget has also impacted positively on the economy, with more money to spend on projects across the country and debts owed to many contractors, civil servants, among others, gradually being settled.
“The hospitality industry is service and cash based. There seems to be money now in the system and people are beginning to spend it. Conferences are back in Abuja, NGOs, which depend majorly on government funding, are back, corporates and businesses have adjusted and moved on. So, things have improved and impacted the hospitality industry in the last six months and is expected to improve further in the remaining part of year”, Akile said.
Speaking in an exclusive interview with BusinessDay, Mark Loxley, general manager, Southern Sun Ikoyi Hotel, Lagos, notes that in the last eight months, business has been better.
“Occupancy is picking up and it will continue through the summer, while the last quarter of the year is promising. We have to be optimistic because 2018 is a pre-election year. There will be a lot more stimulation in the second half of this year”, Loxley says.
He observes that some good initiatives by Central Bank of Nigeria (CBN) especially the unpegging of the naira, which has eased forex, and efforts by government at developing the non oil and gas sector and diversifying the economy, were top among the reasons for the improvement in the economy.
“So, I think as the fiscal and monetary policies are being followed, we must be optimistic that things will get better. As the economy gets better, more hospitality infrastructure and businesses will come online”, he concludes.
Oscar Oguike, a hotelier, disclosed that he has commenced talks with partners and developers of a 170-room four-star hotel project in Abuja, which was stopped in the wake of the recession and high exchange rate, because two foreign partners declined further investment until the economy recovers.
“I run three indigenous hotels across the country and my managers are beginning to call me everyday now because things are improving. So, I think it is time to resume work on our major project in Abuja. Of course, we will not meet the 2018 opening date again, but we have to woo more partners to finish the projects by end of 2019”, he says.
In the same vein, the seventh edition of the PricewaterhouseCoopers’ ‘Hotels Outlook: 2017-2021’, revealed how the Nigerian hospitality sector withstood economic headwinds.
“Nigeria is expected to be the fastest-growing market from a revenue perspective, over the next five years, with a projected 14.7 percent compound annual increase in revenue, benefitting from an improving economy, continued growth in domestic tourism, and expansion in the number of available rooms”, Pietro Calicchio, Hospitality & Gaming Industry Leader for PwC Southern Africa, says.
The PwC report, which featured information about hotel accommodation in South Africa, Nigeria, Mauritius, Kenya and Tanzania, notes that the positive outlook on the hotel market is mainly due to an improved economy, continued growth in domestic tourism, and expansion in the number of available rooms.
Considering that overall hotel room revenue is expected to expand at a 14.6 percent compound annual rate, to US$517 million in 2021 from US$261 million in 2016, Oguike disclosed that most foreign partners who also follow PWC’s reports for investments, are more than willing to invest in the country’s hospitality market goldmine, but are waiting for signs that the lean period is over, while the more adventurous are buying properties across the country that would be redeveloped into hotels when the economy fully rebounds.
OBINNA EMELIKE
