Amid elec­tion fears, sea­sonal busi­ness lull may linger in Q1, Q2 2019

... as hos­pi­tal­ity sec­tor pre­pares for an­other rough ride

Business Day (Nigeria) - - NEWS - OBINNA EMELIKE

The Nige­rian hos­pi­tal­ity in­dus­try faces a spec­tre of rough ride in the first and sec­ond quar­ters of 2019, amidst grow­ing fears over the up­com­ing gen­eral elec­tions. This will be a re­ver­sal of the im­pres­sive re­sult it achieved in the last quar­ter of last year, which was ad­judged best for a long time in terms of oc­cu­pancy rate and rev­enue gen­er­a­tion with av­er­age 70 per­cent oc­cu­pancy.

The ex­pected de­cline in the in­dus­try may also re­sult in op­er­a­tors set­ting min­i­mum rev­enue tar­gets, de­lay in com­ple­tion of on­go­ing ho­tel projects and even down­siz­ing un­til the sit­u­a­tion im­proves.

The sit­u­a­tion, which is pre­dicted to be sim­i­lar to the peak of the eco­nomic re­ces­sion of 2016 when oc­cu­pancy fell below 30 per­cent, is due to the sea­sonal lull in busi­ness as­so­ci­ated with ev­ery new year when busi­nesses are slowly pick­ing up, and worst still, the fears over the 2019 gen­eral elec­tions.

Com­par­ing this time last year and other non-elec­tion years with 2019, book­ings and ho­tel ac­tiv­i­ties are usu­ally down re­sult­ing in oc­cu­pancy rates of below 40 per­cent. But the sit­u­a­tion im­proves the mo­ment cor­po­rate or­gan­i­sa­tions re­sume fully from the last week in Jan­uary or first week in Fe­bru­ary.

The sea­sonal lull in busi­ness in the bet­ter part of Jan­uary of ev­ery year is nor­mal. But the fear this year is that the lull may linger be­yond the first quar­ter be­cause the econ­omy usu­ally picks up months af­ter the elec­tions if there is no dis­rup­tion. Be­sides, the bud­get for 2019 has not been passed and govern­ment pol­icy di­rec­tions will not be clear to in­vestors un­til af­ter May 29 when swear­ing-in of elected of­fice hold­ers will hold.

“So, un­til then, busi­nesses may

not re­bound,” Clems Oziri, an econ­o­mist, said.

Cur­rently, oc­cu­pancy rate is in the range of 30 per­cent-40 per­cent for in­ter­na­tional ho­tel chains and about 20 per­cent in in­dige­nous ho­tels. This devel­op­ment is wor­ri­some for Ron­ald Stilt­ing, gen­eral man­ager, Ibom Ho­tel and Golf Re­sort, be­cause the fear that the elec­tions may be vi­o­lent is al­ready scar­ing guests who now shelve book­ings, and cor­po­rate or­gan­i­sa­tion who are also hold­ing on un­til the elec­tions are over on a peace­ful note.

The Bri­tish-born gen­eral man­ager fears that this year may be dif­fi­cult for the hos­pi­tal­ity in­dus­try.

“I can re­call when Pres­i­dent Buhari came to power in 2015. I was at Lilly Gate then. It took long for a de­ci­sion to be taken to as­sure in­vestors on the di­rec­tion of govern­ment pol­icy and that af­fected the econ­omy. That sit­u­a­tion may re­peat and hos­pi­tal­ity busi­ness will suf­fer for it be­cause the hos­pi­tal­ity in­dus­try needs ac­tiv­i­ties in the econ­omy to thrive,” Stilt­ing said.

Cor­rob­o­rat­ing Stilt­ing, Oziri be­lieves this year’s elec­tions will not be dif­fer­ent from 2015.

“If the govern­ment is not proac­tive with early pol­icy di­rec­tion af­ter the elec­tions and the swear­ing-in, the econ­omy will suf­fer and I don’t see that hap­pen­ing with any of the two ma­jor can­di­dates for the gen­eral elec­tions in Fe­bru­ary,” he said.

Ubong Nseobot, mar­ket­ing and sales man­ager, South­ern Sun Ikoyi Ho­tel, who noted that the ho­tels are strug­gling now to sus­tain oc­cu­pancy, thinks that the elec­tion is sup­posed to gen­er­ate even more busi­ness for the hos­pi­tal­ity in­dus­try through meet­ings, po­lit­i­cal gath­er­ings, and cam­paigns, which would have im­pacted on their busi­ness es­pe­cially this lull pe­riod.

She as­sured that the tra­di­tional lull in busi­ness in Jan­uary would soon elapse.

“But if by the first week in Fe­bru­ary ho­tels are still strug­gling, then we know that it is be­cause of the fears of the elec­tions re­sult­ing in many peo­ple be­ing afraid to re­turn to Nige­ria af­ter the hol­i­days, and prob­a­bly wait­ing for elec­tions to be over be­fore they come back,” she ex­plained.

Ikechi Uko, CEO, Ak­waaba African Travel Mar­ket, noted that hote­liers are ex­pect­ing a rough ride this year be­cause of their ex­pe­ri­ence with elec­tion years in the past. “Usu­ally, the econ­omy acts dif­fer­ently dur­ing elec­tion time. Peo­ple are cau­tious, in­vestors do not take fur­ther risks and the whole econ­omy is on alert. So, that is what we are about wit­ness­ing,” Uko said.

Which­ever way the elec­tions go, Uko as­sured that hote­liers must have planned ahead, while the Nige­rian econ­omy will keep heal­ing by it­self.

While Uko does not see an ex­tremely bad year be­cause of the elec­tions, hote­liers hope for a quick re­bound of the econ­omy af­ter the elec­tions, but point out that the po­lit­i­cal ac­tors have to make it hap­pen if they have the coun­try’s in­ter­est at heart.

But they wish that oc­cu­pancy will not go below 30 per­cent dur­ing the long lull in or­der to re­main in busi­ness.

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