The COVID-19 pandemic that has ravaged the global economy has brought the hospitality industry to its knees, with the Nigerian hospitality industry facing its worst challenge in history as business remains grounded.
The pandemic came at a time the industry was still reeling from the annual January-February business lull, leading to the scaling down of operations to essential services in late February and a total shutdown in mid-March amid less-than-desired room occupancy rate. The sector recorded over N10 billion revenue loss in the first quarter of 2020.
The five-week lockdown imposed by the Federal Government to curtail the spread of the pandemic further compounded issues for hotels in the country. The gradual easing of the lockdown has brought no respite. With restrictions on public gatherings and air travel still in place, the industry is at a standstill with zero occupancy as all the major hotels are still shut down.
Simon Ntuli, a general manager of an Abuja-based boutique hotel, speaking from his hideout, said beyond the ban on social gatherings and travel restrictions, hotels in Abuja are still shut down because of no patronage as people are still hiding for safety.
Meche Ugwuegbu, sales manager of a Lagos-based four-star hotel, said the zero occupancy would linger as international flights, whose passengers constitute 60 percent of guests in branded hotels, are no longer arriving, coupled with the ban on interstate travels and public gatherings.
“Until there is a total easing of the lockdown in Nigeria and globally, hotel rooms will still be empty. People need free movement and transportation to live their lives and transact business. The two are not forthcoming now,” Ugwuegbu said.
The recent directive by the Lagos State government that all hotels must remain shut except those used as coronavirus isolation centres or for quartering health workers has further dashed the hope of reopening hotels soon, furthering the impact of the pandemic on hotel business.
Industry stakeholders say losses could skyrocket to over N50 billion in the second quarter of the year if recovery is delayed. Missed Easter sales opportunities and the huge business window that would likely be missed in the coming summer holiday are expected to impact hugely on the sector.
Marcel Agada, a sales director in an international branded hotel in Lagos, disclosed that for the first time, guests were not interested in the hotel’s Easter promotion package.
“We had to withdraw the fun-loaded and heavily discounted Easter package three weeks ago when we had several cancellations from guests. We would have made at least N50 million from the Easter sales,” Agada said.
He said the room was the major offering of the promo and when potential guests started cancelling their room bookings, there was no business to pursue again.
A source at Radisson Hotel Group in Nigeria said the group has not opened any of its hotels in Nigeria since the shutdown in March.
Also, two hotels under the Hilton brand have not opened, while Southern Sun Ikoyi and other South Africa-branded hotels in Nigeria are still under lock and key.
Bola Adesola, a sales executive with Marriott International in Lagos, noted that no hotel would open when guests are not permitted by law to gather.
“Until government lifts the ban on social gatherings and restrictions on movement, no hotel will open because the operation cost is huge after a long period of no business,” Adesola said.
While the sector groans, however, experts support the continued shutdown, arguing that if a hotel of 100 rooms struggles to run only 20 rooms after the easing, it would be better to close down because same operation cost for 100 rooms goes into running 20 rooms amid taxes to pay for operating.
“Government cannot ask for taxes while hotels are shut down. So, let’s wait until business booms again instead of wasting our savings on maintaining few guests,” one expert said.
But amid the impact of the pandemic on their businesses, some players in the sector are rethinking their strategies to stay afloat.
Last week, Eko Hotels and Suites, one of the industry’s giants, announced the launch of a laundry and food delivery business, a first since its over 30 years of operation.
In a series of tweets via its official handle @EkoHotel, the hospitality giant is promising clients a 24-hour home delivery laundry service.
“Have you called us? We will pick up your laundry and have it safely delivered to your doorstep within 24 hours,” it tweeted on Thursday.
In another tweet, it said, “Dine with us in the comfort and safety of your nest as we now offer take-out and delivery options. Checkout our story highlight for a full menu.”
Industry experts with good knowledge of the matter told BusinessDay that the decision to delve into laundry services is a consequence of the huge economic loss the coronavirus-induced lockdown would have inflicted on the hotel.
“Most hospitality players now know that this pandemic is affecting their business acumen and revenue generation hence they are changing their mode of operations, business acumen and revenue generation,” said Amaka Amatokwu-Ndekwu, CEO, The Pyne Hospitality Company and president, Women In
Hospitality Nigeria (WIHN), a leading campaign group that provides jobs and entrepreneurship training for women to explore opportunities in that sector.
Amatokwu-Ndekwu, who described the pandemic as a new world that has badly affected occupancy rates, revenue, jobs and services, said not all hospitality organisations would be able to survive the catastrophic change as many have financial commitments with banks.
“There is serious confusion and fear on how these financial obligations will be met bearing in mind the current situation of revenue loss. There is so much uncertainty both for owners and employees,” she told BusinessDay.
MKO Balogun, a facilities management expert with good knowledge of the industry, said for the next one year or more “the industry will not be able to return to normal from the loss suffered from the pandemic”.
Balogun said since the major sources of revenue are being affected, players in the industry would have to find another strategy to survive.
