The Nigeria hospitality industry has surpassed its performance in the last quarter of 2017 and second quarter of 2018, which were adjudged best for a long time in terms of occupancy rate and revenue generation with average 70 percent occupancy.
Currently, room occupancy rate, which was below 40 percent at the peak of the recession in 2016, slightly above 50 percent in late 2017 and stabilized at 55 percent in the first quarter of this year, is averaging 65 percent in the first half of the year.
The impressive result, which has also impacted revenue from 5-15 percent growth, is attributed to stability in the economy, improvement in government spending, more inflow of foreign direct investments, among other social activities.
But while mature hotel markets of Lagos, Abuja and Port Harcourt smile to the banks, hoteliers are expressing caution as the second half of the year, especially the last quarter, may witness decline in occupancy and revenue as the 2019 general election draws near.
Comparing the second half of 2014, particularly the last quarter, which preceded the 2015 election with half year 2018, most hoteliers recorded huge decline in occupancy rate and heavy revenue loss resulting from flight and booking cancellations, less government and corporate activities, all for fear of political instability.
“I can recall how we lost 30 foreign guests in one hour in early December 2014 due to security warning by their embassy that Nigeria was being heated up by politicians and could burst anytime, and so, they short-lived their stay. The same scenario is about repeating and we expect bookings to decline”, Adedeji Martins, a hotelier said.
The first quarter of 2015, according to Martins, was the worst because it witnessed lots of booking cancellations as most foreigners left hotels, those due to visit postpone till after the election and corporate organizations scaled down their activities within their office spaces.
Also affirming the fears of hoteliers is the recent Reuters poll, which revealed that Nigeria’s economy is expected to grow more slowly this year than previously forecast as investors hold back before elections in early 2019.
Speaking on the result of the poll, Rafiq Raji, chief economist at Macroafricaintel in Lagos, said business and investment decisions are likely to be delayed till after the 2019 elections.
In same vein, Edwin Bongani, a South African hotelier with interest in developing hotels in secondary cities across Nigeria, noted that economic stakeholders are beginning to hold back because the high-wire politics underway.
“Elections in the Western world hardly instigate caution on the part of investors, but they do in Africa and that is why economic activities may dwindle until political stability. We have seen some properties for hotels in Owerri and Enugu, but we will wait until the 2019 elections are over to sign the deals. Though there is pressure from the property owners, we will wait”, Bongani said.
Unlike in 2014 where some hoteliers expect the electioneering for 2015 to generate business for them, Ameed Hathit, a Lagos hotel general manager, is pessimistic. “We do not know what is going to happen during the 2019 election though the industry is more hopeful of positives today than it was for the 2015 election. The fear that there will be violence is our greatest enemy because it restrains would-be guests, corporate customers and foreigners from patronizing hotels”, Hathit said.
The situation for Martins does not call for celebration but for more caution and prudence in the management of the profit made now as the impending gloom in the hospitality sector may linger even months after the elections as was the case in 2015.
However, hoteliers hope that occupancy rate will not decline to as low as below 30 percent in order to remain afloat and encourage quick recovery after the elections.