Despite high operation costs, especially multiple taxation and high energy costs, the Nigerian hospitality industry was resilient in 2025.
The resilience, according to industry experts, was due to the stability of foreign exchange, a bit strengthening of the Naira, and the easing of inflation, which boosted purchasing power and patronage across individual and corporate guests.
Looking at 2026, they also see consolidation of the impressive gains and further boost on the recovery from the huge shock of the economic reforms, which kicked off on May 29, 2023.
In his business outlook for the hospitality industry in 2026, Peter Idoko, general manager, Legend Hotel Lagos Airport, Curio Collection by Hilton, noted that the Nigerian hospitality industry would remain resilient and rate-driven, with demand led by the corporate, government, and diaspora travels.
Idoko also noted that performance would increasingly be concentrated in well-branded and professionally managed hotels.
On his part, Olugbenga Sunday, director general – Hotel managers Conference Africa, who doubles as the CEO of Tojum Hospitality, projected a steady but cautious growth in the industry this year, which would be largely driven by business travel, corporate bookings, conferences, and events.
He also projected that demand would continue to outpace supply in major commercial cities, especially Lagos and Abuja, resulting in strong pricing power for hotels.
Also, in his hospitality industry outlook for 2026, Emmanuel Ele, managing director/CEO, Six Regions Hotels Nigeria, projected moderate growth in ADR (Average Daily Rate), which would be driven by rising domestic travel and corporate bookings.
As well, Ada Ojukwu, sales director, Sheraton Lagos Hotel, said that the industry will continue to experience measured rate growth in 2026.
As a pre-election year with increase in political activities, Brian Efe, finance/hospitality expert, said that 2026 will be an interesting year for the hospitality industry.
“The increase in political activities means more travels and more meetings. Occupancy is expected to be in the increase and average rate will also increase month-on-month,” Efa said.
Also on room rate, Idoko and Ojukwu are projecting continued growth across the year.
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“Room rates, particularly in Lagos and major commercial centres, are expected to continue growing marginally due to inflation and, more importantly, the rising cost of utilities and multiple taxes levied on the industry,” Idoko said.
The average room rate, according to Ojukwu, is expected to increase by approximately 5–10 percent, largely reflecting inflationary pressures and the rising cost of operations.
Sunday also projected elevated average room rates as operators seek to balance high demand with rising operational costs, while occupancy levels are expected to stay stable rather than surge significantly.
Most of the experts noted that despite the positive outlook, inflation and the evolving tax environment will remain key pressure points in the industry this year.
Additional to the pressure points, according to Sunday, are issues such as rising costs of food, energy, staffing, and imported inputs that will continue to strain margins in 2026, while pushing hotels to adjust rates upward in a price sensitive market.
Speaking on the pressure points, Idoko said, “Although inflation is easing, it remains elevated, sustaining upward pressure on wages and operating costs and reinforcing the need for disciplined pricing, cost control, and revenue optimization”.
They also dissected the new tax laws, discarding fears and possible impact on the industry this year.
According to Idoko, the new tax laws, which took effect from January 1, 2026, do not materially increase headline tax rates but introduce tighter compliance and administrative discipline, adding modest cost pressure rather than dampening demand.
Ojukwu also toed the same line saying that the recent tax adjustments and broader economic conditions are encouraging hotels to become more strategic in pricing, cost management, and value delivery.
“We see this period not just as a challenge, but as an opportunity to strengthen our market leadership and continue delivering premium and value-driven hospitality to both business and leisure travellers,” Ojukwu said.
For Sunday, convener of Hotel Managers Conference Africa, the impact of the new and multiple tax obligations will further tighten profitability of hotels this year, while also increasing the need for operational efficiency, smarter revenue management, and stronger advocacy for tax harmonisation across the industry.
Differing from the rest, Efa decried that the new tax law will require a lot more in terms of compliance, which could lead to additional cost to hotels.
Offering financial insight, Efa, a financial expert, explained that while smaller hotels may enjoy tax free status due to the non-taxable threshold of N100 million annual turnover, bigger hotels would have to deal with compliance costs this year and going forward.
Ele also toed the same line saying that inflationary pressures and the new tax legislation may compress margins, increase operational costs, and slow recovery in discretionary travel, making cost management and dynamic pricing critical for profitability this year.
While calling for stronger advocacy for tax harmonisation across the industry, Sunday insisted that resilience can only be sustained this year if stakeholders adopt good cost control measures, and offer value-driven services.
But the experts all agreed that despite the new tax laws or other possible challenges, the industry focus remains to maintain rate integrity, enhance service quality, operational efficiency, and most importantly, guest experience.
However, Mudasiru Adeniji, a top hotel investor, is worried that the new tax laws will cut deep in hotel revenue, despite several calls by hotel associations across the country against multiple taxation.
“Sadly, the government has paid less attention to the calls for the harmonization of the many tax regimes and the different tiers we pay to,” he lamented.
Adeniji, whose company franchised two international brands, with a pipeline project opening later this year, further decried that government tax agents will be merciless at enforcing compliance, as well as closing down hotels that refuse to comply with the new tax laws.
“We have no option than to comply with the new tax laws. But we have to push whatever cost we incur to the guests in order to stay in business,” the investor said.
Another hotel owner, who pleaded for anonymity, also decried that hospitality industry is usually as ease target for tax agents, especially foreign brands, and with the new tax law, the agents of government are empowered by law now and could go beyond the law in the enforcement, extortion and even clamping down on allegedly non-complying hotels.
“The hotel industry must comply with the new tax laws to stay in business this year because we are easy targets, especially now that the boys are empowered to deal with us as they like if we fail to pay or remit taxes. But the taxes are too much. That is the worry for me,” he lamented.
