The Nigerian hotel industry continues to blossom despite obstacles to growth such as poor infrastructure, security challenges and skilled labour shortages. This was revealed in a report on the sector by foremost research agency, Agusto & Co. in Lagos this week.
According to the report, despite the aforementioned hindrances to hotel operations, the failure rate for Nigerian hotels remained low at about 5% on a year – on–year basis.
In 2012, the Nigerian hotel industry boasted about 6,000 hotels nationwide with an estimated room supply of 60,228. Local brand hotels supply about 91% of total rooms, while international brand hotels supply about 9% of the nation’s hotel rooms. Agusto & Co. emphasised that though the number of hotel rooms supplied by international brand hotels was low in comparison to local brand hotels, the foremost research agency believed that this was soon to change with the rise of new hotel development deals between local investors and international hospitality groups such as Accor Hotel Group, Hilton Worldwide and The Mantis Group.
The report revealed that the average occupancy rate for Nigerian hotels was estimated at 60%.
In regards to the key commercial cities of Lagos, Port Harcourt and FCT Abuja, average occupancy rates were 70%, 70% and 40% respectively in 2012. The report also highlighted the fact that the nation’s economic capital, Lagos, had captured the largest share of the Nigerian hotel market due to business travel.
In addition, Lagos had surpassed Abuja becoming the city with the highest average hotel room rates in the nation. The report disclosed that “as at December 2012, average hotel room rates in Lagos were estimated at 55,780 ($354) for international brand hotels and 33,000 ($209) for local brand hotels.” Nevertheless, Agusto & Co. foresees a reduction in hotel room rates between the ranges of 5%-10%, in the short-to-medium term due to the influx of new hotels.
Agusto & Co. estimates that the Nigerian hotel industry in 2012 generated sales of about ₦505 billion, a 33% increase over prior year. This growth in sales volumes was attributable to the growing demand for ancillary services such as food and beverage and meeting and conferencing facilities by business travellers and corporate clients. This growth in sales was evident in the growth in the hotel industry’s contribution to the nation’s Gross Domestic Product (GDP) in 2012 to 0.55% from 0.52% recorded in 2011.