• Friday, March 29, 2024
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Hoteliers bemoan collapse of once-thriving industry

$277bn value increase in global top brands indication of resilience amid Covid-19 – Survey

Truly, coronavirus ( Covid- 19) has dealt a deadly blow on the Nigerian hospitality industry, with impact expected to last long after the virus is contained.

The reality is that the situation has gotten worse; from scaling down to essential services three weeks ago, to a total shutdown now.

For the first time in the history of the Nigerian hospitality industry and even at the global level, hotels did not open their doors to guests on Easter Sunday because of the lockdown enforced by governments across the world to curtail coronavirus spread. The situation is truly unprecedented; shattering all business plans, revenue targets and growth projections.

As at today, April 17, 2020, all international branded hotels have shutdown, expatriates among their top management have been evacuated by their respective countries, their Nigerian employees are back to their families, while a few security personnel hang around empty hotel buildings, which are sadly under lock and key.

The indigenous brands that have no expatriates to discharge, have also shutdown and asked employees to return to their families until further notice.

Read also: Telcos’ data revenue to surge amid COVID-19 lockdown

The big question is how long will the ‘further notice’ be?

Wth the lockdown, movement is restricted, potential guests are held back and even when there is no restrictions, hoteliers think their employees are vulnerable as guests who test positive to coronavirus can spread it among staff.

However, there have been special cases where companies like telecommunications, pay TV outfits, and security firms contract hotels to quarter their staff who offer essential services, but the experiment did not last as the model is not profitable, while sourcing of food items and other necessities is impossible as markets are closed, logistics almost impossible.

Again, some had few but sustainable guests (majorly foreigners) amid employees that serve them on the condition that nobody enters or leaves the hotel to ensure safety of guests and employees.

Yet again, the model crashed when European countries and United States of America evacuated their nationals in Nigeria, most of whom were staying in the hotels.

Now, it is total collapse of an industry as hotel properties are under lock and key. Hoteliers are really troubled, especially those who obtained bank facilities for expansion projects.

According to Mike Akanumoh, a hotel expert, the current situation is unprecedented and nobody ever imagined it could be this bad, including those who obtained bank loans to build hotels.

“It is total shutdown, zero occupancy, zero revenue, and yet huge expenses to be incurred from restoring facilities that will deteriorate within the period of the shutdown”, Akanumoh said.

Osakwe Ehumadu, an Abuja-based hotelier, decried that many of his colleagues in Abuja are going to lose their hotels to the banks due to the inability to pay back loans used in setting up the hotels because of the shutdown of their businesses occasioned by the lockdown.

“I have two hotels in Abuja, but I am still paying back the loan I obtained to build the second hotel, which is 120 rooms. Last month, we couldn’t remit completely the agreed monthly sum to the bank and they have already written to acknowledge that lapse. It is going to be tougher than I expected”, the hotelier lamented.

Fatai Ajibola, a Lagos hotelier, noted that the first quarter of the year is a wrong time for sustained challenges in hotel business like the current coronavirus pandemic because the first quarter is usually slow and there are many bills to settle despite lull in business, including servicing bank loans.

“We canvassed for Tourism Trust Fund, where hoteliers can obtain loans with soft interests, but it did not materialize. Now, huge debts are hanging on the neck of most hoteliers due to the inability to service the loans, a sad development occasioned by persistent lull in business. It is not that you cannot build hotels without bank loans, it will take more years if you do not have guaranteed source of adequate fund”, he said.

Beyond being under pressure to pay back bank loans from an operational and thriving business, some hoteliers are in bigger trouble, particularly those whose hotel projects are uncompleted and need more funding.

“My financial adviser warned me to go for crowd funding instead of bank loans for my hotel project. We are stuck now because my partners in the project are not forthcoming with the agreed counterpart funding because of coronavirus scare. But my concern is that I borrowed part of my funding from a bank. They will soon be on my neck”, Dan Ikheve, a first-time investor in hotel business, said.

For Stan Jameson, general manager of an international brand in Lagos, shutting down is not the issue, the problem is restarting the hotel after the virus is curtailed.

“Restarting a hotel after months of shutdown comes with a huge cost. It is like opening a new hotel; you have to restore so many facilities, get staff to be in the right frame of mind, renegotiate with suppliers, announce your opening, reach out to your clients and then wait for guests, who I don’t think will be willing to sleep in hotel rooms soon after the virus is curtailed”, he explained.

The general manager, who responded from the comfort his Manchester home, said the end of the pandemic is not in sight, hence restoration of the hotel industry may linger longer than other sectors.

In the same vein, Akanumoh thinks that the situation is a global one and that the industry would bounce back when the world recovers and start traveling again.

“For now, there is no projection for business recovery plan that will work. Already the travel sector missed Easter sales, and summer holiday is also gone with huge revenue loss. The concern now is how to curtail the spread of the virus, help the infected to recover, stop the deaths and not business recovery in the immediate”, he said.