Recession to delay projected recovery for Nigerian hospitality sector
… stabilising occupancy, pipeline hotels at risk
With the recent quarter three (Q3) report of the National Bureau of Statistics (NBS), which reveals Nigeria has gone into another recession following the negative growth recorded in two quarters of 2020, hope of recovery for the hospitality sector is most likely going to be dashed.
Moreover, the sad revelation and reality have made nonsense of the gains made so far by the embattled Nigerian hospitality sector after easing of the lockdown and preopening investments in facility upgrade and safety measures in line with Covid-19 protocols.
As well, industry stakeholders, especially hoteliers, who were happy with the stabilising occupancy rate and improving revenue inflow, are beginning to fear for the worst.
Also, with the recession, hotel projects under construction in Nigeria will be delayed or abandoned as hoteliers will not risk the over 23 percent interest rate by commercial banks.
According to W Hospitality’s 2020 African Pipeline Hotel Report, Nigeria leads West Africa’s 22,633roomspipelinehotelwith 7,809 rooms across 48 hotels.
Sadly, the actualisation of the hotels in Nigeria is at risk going by the recession.
Of course, 2020 is regarded as a minus-year for the sector by many stakeholders because of the unprecedented negative records in occupancy rate and revenue occasioned by the pandemic-induced lockdown, and now recession.
It would be recalled that average occupancy stood at less than 30 percent in Q1 of this year, a development seen as normal due to the lull in business associated with every New Year. Also, the sector lost recovery opportunity to the Covid-19 outbreak and the lockdown, amid shutdowns that resulted in zero occupancy and revenue, but occupancy picked up after the easing of the lockdown and opening of the airspace stabilising at an average 45 percent since the beginning of the last quarter of this year – from October.
With the recession, which though the Federal Government claims the country would exit by Q1 2021, the hospitality sector is back to the battle of survival mood as occupancy is expected to nosedive once again.
Speaking on the development, many hospitality stakeholders expressed fear and decried that the industry was in for another round of business uncertainty, starting with Christmas and New Year sales, which they think would be impacted by the recession.
They project that occupancy is likely going to hover between 20 and 30 percent for a long time if the country does not exit recession at the time projected by the government.
“With the negative impact of the pandemic, which the sector has not recovered from and now recession, many hotels may close shop finally as they will not continue to run below sustainable occupancy for a long time and with no respite in sight,” Marcel Attah, a hotel consultant, said.
According to Emmanuel Ele, managing director/ceo, Six Regions Hotels, the NBS report on another recession is coming at a time many hotels are repacking for festive sales, and many Nigerians are apprehensive of the uncertainty of the coming year, hence patronage of hospitality offerings will most likely be impacted negatively this
festive season.
“Considering the negative impact of the pandemic, the purchasing power of many Nigerians has grossly depleted as well as their spending and patronage of hospitality offerings this festive season,” Ele said.
However, the worry for Samiu Adeniyi, a hotelier and franchise owner, is that Meetings, Incentives, Conferences and Events (MICE), the revenue and occupancy goldmine for hotels, which is beginning to pick up after the easing of the lockdown and sound of festivity in the air, would decline again.
“With the recession and second lockdown by many European countries, MICE is gone. Event organisers now rely on virtual platforms, which take away food from the mouth of the hospitality industry,” he decried.
Despite the sad reality, some hoteliers see Nigeria doing better in the current economic crunch than in the 2016 recession.
According to Peter Idoko, general manager, Legend Hotel Lagos Airport Curio Collection by Hilton, the sector was caught unaware during the last recession, though some are still recovering from its impact, many businesses are better prepared now to face challenges considering the many measures they have put in place to stay afloat since the Covid-19 outbreak and lockdowns.
Some of the survival strategies, which may also see hotels survive the recession, according to Idoko, is looking more to the domestic front to woo more Nigerians to the hotels as challenges faced by international travellers abound, especially double quarantine at destination of origin and final destination.