BusinessDay

Hotels in Nigeria rebound to pre-pandemic levels

...Rising costs, inflation seen muting second half

The Nigerian hospitality sector saw a strong rebound in the first half of this year, after two years of pandemic-related disruptions.

The sector recorded 70 percent average occupancy in H1, according to stakeholders, on the back of improved business activities, boosted by the return of foreign guests and business travellers as well as increased corporate and government patronage across both independent and foreign brands.

In the period under review, business activities recovered to almost 2019 levels, especially across the major international brands, with Transcorp Hilton Hotel Abuja, leading in revenue growth.

The half-year witnessed sustained occupancy rate of between 70-80 percent across most international brands and 50-60 percent across some independent hotels, a pointer to the fast recovery of the sector from the lingering impact of the COVID-19 pandemic.

Comparing the H1 2022 with results from the same period in the two previous years, the sector witnessed the worst H1 result in history in 2020, with zero revenue during the three-month lockdown due to the pandemic that saw all hotels shut down, resulting in over N50 billion revenue losses.

The sector barely recovered in H1 2021 as it continued to battle the fallout of the pandemic, travel restrictions, health and safety concerns and low purchasing power to stay afloat, leaving earnings below the N20 billion mark set by industry stakeholders for the first phase of recovery in the H1 of 2021.

However, the sector earned more in H1 2022 with over N30 billion revenue, almost double of H1 2021 earnings, yet the figure fell short of the 2019 levels of over N60 billion, which was adjudged the highest before the pandemic disruption.

Speaking on the H1 2022 result, Owen Omogiafo, president/group CEO, Transnational Corporation Plc, said the group recorded strong performance in its power and hospitality businesses, which continued to perform excellently despite the tough operating environment.

Transcorp’s half-year results for the year ended June 30, 2022, showed an improved performance across all its major investment lines.

“Our hospitality arm, Transcorp Hotels Plc recorded a revenue growth of 173 percent over the same period last year, demonstrating a strong and sustained recovery from the impact of COVID-19 pandemic, leveraging innovative strategies and superior customer experience,” Omogiafo said.

Radisson Hotel Group in Nigeria also said it saw an improvement in its performance in H1 2022.

According to Christophe Noel, general manager at Radisson Blu Hotel Ikeja, Lagos, business was good in the first half of the year with sustained occupancy. “So far, I cannot tell you that we have been badly affected. We have good occupancy,” he said.

According to him, the flexibility in their approach, and the ability to adapt, respond, and implement measures swiftly, coupled with the Radisson Hotel Group’s five-year plan on significant investments, new brand architecture, new IT systems, new revenue management systems, and a new loyalty programme, have helped to keep guests coming and the hotel focused and afloat despite the economic headwinds in H1 2022.

Wellington Mpofu, executive assistant manager, commercial at Radisson Blu Anchorage, Lagos, said H1 2022 was good with occupancy sustained between 60-70 percent, almost the same as pre-pandemic level of 2019.

He attributed the improvement to “the return of normalcy in the system and the personalised service and world-class facility offerings at the hotel, which has the best waterfront in Nigeria”.

Emmanuel Ele, CEO of Six Regions Hotel, a hospitality consulting firm, said hoteliers were back on track, opening a few hotels within the period, while some of those shut down during COVID-19 reopened in the first half of this year.

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But many hoteliers are concerned that the rising operating costs, soaring inflation in the country and political risks ahead of the 2023 elections could dim the sector’s growth prospects in the second half.

Oluomo Jamiu Talabi, president of Lagos Hoteliers Association and CEO of Bosede Talabi Guest House, Ojota, Lagos, decried that the high cost of operation is impacting the business negatively, leaving many with the options of increasing rates, shutting down or converting hotels to real estate.

For him, the increasing cost of operation puts operators in a tight corner, while making the rest of the year uncertain because there seems to be no control over costs, especially that of diesel.

Brain Efe, general manager of Victoria Crown Plaza Hotel, Victoria Island, Lagos, also lamented that the sector would likely face a harsher situation in H2 than the COVID-19 lockdown on the back of the sky-high price of diesel.

“Hotels were shut down during the lockdown and the sector managed the unfortunate situation, but it will be worse when your cost of operation is so high and you cannot transfer it to the customers who are also impacted by low purchasing power,” Efa said.

He is worried that many suggest that increasing rates is the only way out for hotels, and wondered how much hotels will increase rates to and not lose guests.

For him, the second half of the year is not looking bright, considering the mounting number of economic headwinds.

In order to stay afloat and ensure that the guests continue to enjoy the best of hospitality offerings during their stay at any of its hotels in Nigeria, the Radisson Hotel Group plans to respond to the economic situations accordingly.

The Transcorp boss, however, sees a better second-half result, saying: “We do not plan to rest on our laurels, and we will continue to surpass past performances.”

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