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Hotel occupancy falls below 30% on coronavirus

...revenue dips, hoteliers consider shutdown

The Nigerian hospitality sector, which is still recovering from the traditional lull in business between January and early February of every year, is facing an even more difficult challenge occasioned by the coronavirus (Covid-19) pandemic that is ravaging the world and stifling economies amid rising death toll.

Many hotels across Nigeria, both local and international brands, are facing a lull in business in a proportion worse than was seen during the Ebola outbreak or even the 2016 economic recession.

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From occupancy rate of between 50-60 percent in late January, hotels are now recording below 30 percent, the worst in the history of the sector. The occupancy is expected to fall further if and when Nigeria implements total lockdown.

Hotel experts think the industry is losing over N500 million daily from scaling down operations, and would record zero revenue when total shutdown is in place.

Ikechi Uko, a hospitality expert and CEO, Akwaaba African Travel Market, said occupancy in Abuja and Lagos would disappear next week once domestic flights stop on Saturday.

“Until the shutdown, the market will shrink to record numbers with some layoffs,” Uko said.
To cope with the dwindling fortunes, many hotels are scaling down their operations to only the essential services as occupancy keeps falling every day.

Over the week, Eko Hotel and Suites in Lagos announced the scaling down of its operations to essential services only, in compliance with government directive on public gatherings. But the hotel is losing huge revenue from many of the closed facilities, especially the Eko Convention Centre, which earns a big chunk of its revenue.

In the same vein, Transcorp Hilton Abuja and all international brands in the country have scaled down their services to only essentials.

The sad situation, according to Mark Odion, a hotel sales director, has made all revenue targets for the first quarter of 2020 unattainable and half-year results unimaginable as hoteliers are considering shutting down to avert incurring further losses as operation cost remains same even with very low occupancy.

“Hoteliers are in dilemma of taking the harshest business decision in the history of Nigeria’s hospitality industry. If the situation gets worse than 20 percent occupancy, many hotels will shut down because that rate will not sustain even the essential services,” Odion said.

Shola Adeyemo, public relations and marketing manager at Transcorp Hilton Abuja, said hotels are sustained for now by some guests who are trapped in the country and cannot travel due to travel restrictions across the world, as well as long staying guests who have been around for a while.

But the fear is what would happen when the hotels cannot sustain operations with the few guests.
Fatima Salami, general manager, Primal Hotel Ikoyi, said all aspects of the global economy have been hard hit by the coronavirus impact, including the hospitality industry, hence hoteliers would adopt survival strategies which guests should understand at this critical time.

Ronald Stilting, former manager of Ibom Hotel and Golf Resort, thinks the world is in lockdown and the hospitality industry is affected equally as part of global economy.

Some experts are concerned that the impact of the pandemic will linger in the hospitality long after the virus is over.

According to Odion, who is also an economist, with dwindling revenue, most hoteliers would be under pressure to repay bank loans, while hotel projects in the pipeline would likely be abandoned for a long time.
But Uko thinks that the industry will survive the present challenge.

“Tourism will survive because it is resilient,” he said.

 

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