• Tuesday, November 05, 2024
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Why foreign hotel brands target secondary cities with mid-market offerings

Why foreign hotel brands target secondary cities with mid-market offerings

Protea Hotel by Marriott Benin City Select Emotan

Despite the headwinds, economic realities and other challenges, the Nigerian hospitality sector has been resilient over the last two decades.

The burgeoning sector has also attracted more foreign investors and reputable international brands, which come with expertise to grow their portfolio and local skills.

Of course, the development also resulted in a somewhat scramble for market share among top global hotel chains.

From Hilton, Marriott International, Radisson Hotel Group, Accor, and InterContinental that sadly left, to many others in operation and in the pipeline, like Hyatt, the sector has been a fertile ground for investors and brands.

But the last decade has witnessed attention to secondary cities by some foreign brands.

The development, according to industry observers, is intentional and exciting.

The Golden Tulip and Best Western brands championed the shift some years ago with hotels outside Lagos and Abuja, to places such as; Ibadan, Enugu, Owerri, Abeokuta, Warri and Asaba.

Today, Radisson Group, Marriott International and Accor are taking it further to even more remote places with their mid-market brands.

With Park Inn by Radisson Abeokuta, Radisson has many soon-to-open pipeline hotel projects in places like Benin City, Owerri, Enugu, Keffi, Warri and Yanegoa.

The 169-room Radisson Hotel Benin City, its 12 hotels in Nigeria, being built in partnership with the Edo State government, is almost due to open.

Marriott is latching onto the success of Four Points by Sheraton Ikot Ekpene, Protea Hotel Benin City Select Emotan and Marriott’s Protea Hotel Owerri Select to launch to other secondary cities.

Read also: ‘The harsh economic reality is a blessing in disguise for hotels that know their onions’

Explaining the rationale for a hotel in Benin City, Erwan Garnier, senior director, Development for Africa, Radisson Hotel Group, at the hotel signing agreement in the last quarter of 2023, noted that the debut in Benin City perfectly aligned with the group’s growth strategy for Nigeria, which he described as a key market in Africa for Radisson’s scaled growth.

“As our first Radisson branded hotel outside of Lagos and Abuja, the Radisson Hotel Benin City will continue to reinforce our brand awareness in Nigeria, especially for the Radisson brand”.

While Radisson’s debut hotel in Benin City is an upscale offering, Marriott’s Protea Hotel Owerri Select is a mid-market offering.

At the opening of the hotel in Owerri, Volker Heiden, vice president, Protea Hotels by Marriott, Marriott International, said: “The opening of Protea Hotel by Marriott, Owerri Select, illustrates our confidence in the potential of Nigeria and is in line with our commitment to grow in strategic secondary cities across the continent. The recent expansion of the city’s airport will give the city better accessibility, which we are confident will further drive business travel.”

For Marriott International, the expansion to the secondary market is to further create brand awareness among the Nigerian travelling public and global visitors to such places to take enjoy the offerings and take advantage of its wide network.

Jimmy Unegbe, a hotelier and franchise owner, explained that the expansion of foreign brands to secondary cities impacts their bottom line immensely through increased franchise and management fees paid by the hotel owners, as well as more financial rewards for the expatriates, who usually give almost impossible conditions to work in such cities.

“Franchise and management fees have increased in recent times, especially with the devaluing of the Naira. Marriott International is about the most expensive now. But whether in the major or secondary cities, it is all about brand expansion and the hotel brands are gaining too,” Unegbe said.

Unegbe also attributed the growing expansion to secondary cities to the fact that more business and corporate executives, and even the middle class, are willing to stay in mid-market hotel brands against the fame of five-star and luxury hotels.

“In this economy, budget is the key determinant of the choice of hotel for many people now,” he noted further.
Marcel Maui, a Kenyan-born general manager of an Abuja-based three-star hotel, noted that the expansion of foreign hotel brands to secondary cities in the country and elsewhere in the world enables guests to find more harmony in their travel experience.

“As aspected, foreign branded hotels offer the same quality offerings across their outlets globally, even in the remotest areas in the world. Again, they play a significant role in promoting tourism and business activities within their areas of operations,” Maui said.

For Emmanuel Ele, CEO, Six Regions Hotels, a hospitality management company, the expansion is in response to demand.

“Business activities and government engagements across the state capitals and other secondary cities are growing and fueling demands for quality hotel accommodation in these cities. So, brands are looking at meeting the demand and capturing the market,” he explained.

While the development is opening huge investment opportunities in mid-market brands and secondary cities to grow their economy, according to Ademola Jones, a hospitality expert, it is also foreign brands’ response to the declining purchasing power.

“Considering the impact of inflation amid the rising cost of living and low purchasing power, mid-market hotels and secondary cities have become attractive to people who are on a budget.

International brands are also aware of the development and have responded by introducing mid-market brands.

“We see such brands springing up in secondary cities now. We have Golden Tulip Essentials, Protea Select by Marriot, Park Inn by Radisson, Accor’s Ibis is here, and Hilton’s Double Tree is in the pipeline. So, the mid-market brands are on the rise, especially now there is a need to travel on a budget,” Jones explained.

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