Whilst the Nigerian economy, which dominates the region (and the continent) continues to experience no or negative growth, and a consequent serious downturn in the hotel industry, new kid on the block Mangalis is making waves, with no fewer than three hotels opened in the last six months.
What goes up, must come down, and in West Africa that applies not only to planes, but also to entire airlines!
Have you ever felt slightly guilty about leaving that half-used bar of soap for the housekeeper to throw away when you check out? Especially those nice big ones?!I sometimes take mine with me, to use up at home!
Living in West Africa is, as I’ve written before, a bit of a rollercoaster ride! Up, down, upside down and turnabout – except that this rollercoaster never comes to a gentle stop!
A Proliferation of Hotel Brands!
Once upon a time there was Hilton and Sheraton and Marriott. We knew where we stood with them, a Hilton was a Hilton, a Sheraton and Sheraton, and so on. Then they started widening their horizons, becoming global players, and expanding the number of brands in their portfolios.
There has been yet another attack on a hotel in Africa, this time in Mogadishu – again.
Everybody has an opinion about Nigeria, don’t they? An opinion based on one of three things – personal experience, someone else’s personal experience (friend, relation, business colleague etc.) or on what they see, hear and read in the media. Or a combination of two or more of these sources. Many opinions are negative (corruption, noise, chaos, that kind of thing), many are positive (kind people, Nollywood, music, food, that kind of thing). Hardly ever neutral.
As a long-term expatriate resident in Lagos, prior to which I was a regular visitor from my London base, I’ve experienced Nigeria since about 1990, under the military regimes of Babangida and Abacha, and then elected presidents from Obasanjo to our current head of state, Muhammadu Buhari,one year in office as of 29 May 2016.
Nigeria is a bit of a one-man band in some respects, with the president’s policies and philosophy having a fundamental impact on the country, and representing the country to the outside world. Each has his legacy, both in what he achieved (or in some cases failed to achieve) and his reputation as a person. Any discussion about Nigeria which touches on the economy will almost always touch on the doings of the president.
The hospitality industry in Nigeria is very small in terms of contribution to GDP, estimated at less than 1% of the total, and about double that when you add in the travel industry. So we don’t get that much attention from government at any level, except, that is, for soundbites about what a “gold mine” tourism could be. They’re absolutely right, tourism could be a major economic sector, creating much-needed jobs. But when politicians talk about tourism, what they are thinking of is foreigners coming to Nigeria on vacation, not tourism as a whole, which includes both international and domestic travel, and comprises not only vacationers but also, and most importantly for many countries in Africa, business travellers and conference delegates. As the largest economy in Africa, with the largest population, a huge diversity of cultures and landscapes, and a long coastline, Nigeria can excel in all these markets.
So what is the perception of Nigeria’s hospitality business today, and what’s the reality?
Back in early 2014, the first shock to the industry was the Ebola outbreak in West Africa. That wasn’t anything to do with government, and Nigeria actually tackled the crisis very well, and prevented what could have been a disaster of epic proportions. But the outbreak, and the very visible preventative measures that had to be put in place, meant that travellers,both domestic and those from abroad. lost confidence,. And the events that have followed, including the delayed elections in early 2015, and the oil price crash, have continued to negatively affect confidence, to the extent that hotels’ room occupancies are at levels not seen since the mid-1990s, the dark days when Nigeria was shunned by the outside world.
President Buhari took office at the end of May 2015, and since then has pursued a seemingly single agenda, which is to root out corruption. Laudable, indeed, and this is part of the drive to change the perception of Nigeria, from being a country which encourages wrongdoing by those in power to be one which abhors it and is doing something about it. That will help the hospitality industry, engendering greater confidence.
But at the same time, the economy, reeling from the oil price crash since mid-2014, and the resultant devaluation of the Naira, is hitting that confidence, hard. With such dependence on the oil & gas sector for government and private sector income, the trickle-down effect has become a torrent. Government has no money to spend, contractors don’t get paid, they lay off workers, and the hospitality industry has fewer customers. The shortage of foreign exchange, due to the oil price crash, means that manufacturing cannot import materials to make things, they lay off workers. Hotels and restaurants cannot import some of the essentials for their operations, and their offer to their customers is reduced. Foreign investors are waiting to see what is going to happen with the exchange rate before taking decisions on new projects – whilst the common consensus is that the Naira is over-valued, the government (read President) has ruled out any devaluation in the near term.
If there were more confidence, international visitors to Nigeria would find hotel prices a real bargain, for the first time in ages. The average price charged in Naira is not much changed in the past two years, but in dollar terms they have almost halved. Likewise in bars and restaurants, where prices have not increased by as much as the dollar has devalued. So the cost of living has gone down – if you have dollars. Nigeria has always been perceived as being an expensive place to visit and in which to live, but for those with foreign currency, that’s no longer the case.
Is now a good time to visit Nigeria? Indeed, and once we know where we are going with the exchange rate, and with government policy generally, the market is still one which holds immense promise. I’m only aware of one airline which has pulled out of the market, citing economic reasons, whilst domestic airlines such as Air Peace and Med-View are expanding their international routes.
There is no doubt in my mind that the economic crisis we are currently going through is a cyclical correction, indeed a wake-up call to those in power that things need to change, drastically and fast. Nigeria will “never” be an easy place to do business – but it’s the same in many other countries. There will always be challenges, but if we can get through the current economic crisis, which is partly out of government’s control and partly self-inflicted, a return to growth is almost inevitable. Manufacturers, retailers and the rest eye a market of almost 200 million as having enormous possibilities. But we really do need to get that confidence back, one way or another.
Trevor Ward
W Hospitality Group, Lagos
Arriving on an international flight at Lagos airport can be a real test of one’s patience. Grin and bear it.
Most flights from Europe, plus SAA, arrive in Lagos in the early evening, and the airport is hot and chaotic. For that reason don’t wear thick clothes and take a good book to read in the queue.
Through immigration, take a car hire with a driver from one of the big names in the arrivals hall. There are dozens of touts offering taxis – ignore the lot of them. You can also exchange money at the bureau de change in the airport. Touts are, again, outside, and to be avoided.
The roads are incredibly congested most of the time and the driving is poor. So, sit back and let the driver fight it out. The airport is in the north of the city, where there are a lot of businesses, industrial concerns, all the airlines and the Lagos State government. If that’s where you need to be, it is a 20-minute drive from the international terminal – or possibly an hour in heavy traffic.
Hotels in Ikeja include the Sheraton, currently undergoing a complete face lift, with great new rooms, the Protea Hotel Select Ikeja, two Ibis hotels, and a couple of Best Westerns.
Downtown Lagos, which is Victoria Island, Ikoyi, Lagos Island and Lekki, is where most of the business activity is located, and consequently the main hotels, restaurants, bars and other leisure spaces. To get there, your driver will take you across the Third Mainland Bridge, which is one of only two routes from the airport to the south of the city. Although it is the better of the two, it is incredibly congested during peak hours. Even at 05h30 the bridge is clogged going south, and in the afternoon the traffic starts building up going north from 16h00.
Down in the south of the city, there are many hotels from which to choose, from the gigantic Eko Hotel in VI to the small boutique-style Wheatbaker and George hotels in Ikoyi. It’s best to choose a hotel within easy reach of where you are doing business, because of traffic. Global and regional brands such as Radisson Blu, InterContinental, Best Western, Southern Sun and Four Points by Sheraton all have a presence in VI and Ikoyi, and you should expect to pay anything from $300 upwards per night, with breakfast extra.
There are also several very good small, independent hotels, such as La Cour and Bogobiri, which offer value for money, but not the extensive facilities of the ‘big boys’.
All the big hotels have a variety of dining experiences – both the InterContinental and the Eko have Chinese restaurants – and buffets serving Nigerian and ‘foreign’ dishes are popular. Make sure you try the buffet at the Southern Sun Ikoyi. Eating out is expensive, but the portions tend to be large. Try Talindos for great steak, Ocean Blue for fish, Chinaville for Chinese, Lagoon for Lebanese, and Churrasco for Brazilian. For more casual eating and drinking, try Shades (a new sports bar with big screen) and Crust&Cream (restaurant and patisserie).
To get around the city, take an air-conditioned hired car from your hotel. There are yellow taxis cruising the streets, but their cars are awful. Whether in a hired car or a taxi, you have to know how to get where you are going, as most of the drivers don’t know street or place names. The concierge desks in the hotels are there to help.
On the way out of Lagos in the evening, leave five hours before your flight’s scheduled departure time, to be safe.
At the airport, queues to check-in for the USA and European flights can be lengthy, but if you only have hand baggage you can normally ‘prioritise yourself’, if you know what I mean. There are lots of business class lounges airside, most of which take Priority Pass. I like the SDS one on the ground floor and the ASL one upstairs. If you can’t get into any of them, the Heineken lounge is nice and has free wi-fi, along with (paid-for) coffee and beer.
Trevor Ward
W Hospitality Group, Lagos
Eye on West Africa
I have to say that getting new hotels open in Africa is so frustrating. I looked back at an article I wrote for Business Traveller Africa last year, welcoming the forthcoming opening of such hotels as the Noom in Conakry, Marriott in Accra, Four Points in Ikot (Nigeria), the Ramada Plaza in Lagos, the Kempinski in Accra and others. And with the exception ofthe Kempinski, none of these promised hotels have materialised.
Now, given the current malaise in many countries and cities in the region, that might not be such a bad thing.With hindsight,with occupancies are at an all-time low right now, opening new hotels could add to the pain. But that’s not the point. These multi-million dollar projects have got investors’ and lenders’ money tied up, and are still not earning any revenue. So why is it that building hotels in Africa, particularly in West Africa, seems always to take longer than expected? I’m not talking about short delays of a few weeks or months; these are delays measured in years.
At the W Hospitality Group we arejust compiling the data forthe annual Hotel Chain Hotel Development Pipelines survey, and of the 365 deals – signed by the hotel chains for the branding (and in most cases management) of new hotels yet to open – 84 of them, almost 25% of the total, were signed in 2012 or before. One deal, which shall remain nameless, was signed in 2006! In normal circumstances, a hotel takes three or four years to build, so they should have been open by now, shouldn’t they?
Why are circumstances so ‘abnormal’ in West Africa? There are a number of reasons, and I’m sorry to say that one of the main ones is a lack of expertise. The region lacks skilled design teams, engineers, project managers, and sitesupervisors (although, as ever, there are exceptions). A hotel is a really complicated building, and when a hotel chain gets involved, the structurehas to be designed and built to their specifications. A lack of knowledge usually comes across as a refusal to accept new things, so employing a team without the requisite know-howoften results in an expensive and time-wasting need to tear down the work and start from scratch to get it right. A good project manager can overcome that, but then too few hotel projects have had good project managers to lead the team to a successful outcome.
Finances also play a significant role in the delay of construction and completion. I have been witness to many projects that are left hanging because the owner does not have all the funds in the bank, or at least firmly committed,at the outset. He begins work on site anyway, hopeful that the money will be found. Often it isn’t, at least not when it is needed, so work has to stop, the contractor moves off site, and it takes time for them to remobilise. Look at the Le Meridien project in Lagos, on which no work has taken place on site for over five years, since the contractor stopped work. Despite strenuous efforts by the owner, he has not been able to secure the funding to recommence work. The building was supposed to have two towers, one hotel, the other luxury apartments, atop a podium with restaurants and retail. The shell of a single tower, open to the elements, stands there looking lonely.
Another problem is the owner who just won’t stop designing the hotel.To ensure successful completion, it’s really important to ‘freeze’ the design, and then build it. Some owners, however, insist on making changes. Contractors don’t stand in the way, happy to agree to these changes because they can charge extra for knocking bits down and doing them again. Aside from the cost the change in design carries, the time takes to make these changes moves the project further and further away from a timely completion.
Add to that, delays at the port with containers stuck for ages, political and bureaucratic interference, cost overruns, to name just a few, and you begin to understand why projects are almost always delayed. The sad part of this whole saga is that these delays are very often within the control of the team working on the project, including the owner, and can often be avoided.
Then there’s the example of the Radisson Blu, also in Lagos, where the owner decided not to proceed with the operator he had previously engaged, “changed horses” after starting construction. Radisson insisted on design changes in order to meet their brand standards, and that resulted in not just a delay for redesign and reworking on site, but additional cost.
Not all delays in opening can be avoided, of course – in Conakry, both the Sheraton and the Noom hotels have been delayed because of the Ebola outbreak in 2014. At that time, the Noom was almost ready to open, but the owners were unable to get the technicians in to test and commission equipment, they were not prepared to take the risk of travelling to the country. And various hotels have experienced delays in securing that list licence or permit from the government, and cannot legally start operations without it.
But the delays caused by poor planning and management of the project can be avoided. Do the maths – a 200-room hotel charging $200 a night, which is delayed opening, is losing revenue of upwards of $25,000 a day. Now, tell me, by how much did you cut the professional fees, by using that cheaper firm?
Trevor Ward
W Hospitality Group, Lagos
It is so exciting! Hard Rock has chosen Lagos as its second city in sub-Saharan Africa to open one of its iconic Hard Rock Cafes. Okay, so Johannesburg beat us to it, but that restaurant is a long way away, and this one is right here, in Victoria Island, overlooking the Atlantic Ocean. I went to the opening party of the Café recently, and the place was buzzing, just like any other Hard Rock Café anywhere in the world. I don’t mean to sound surprised, but to see an investor taking the plunge into this market at a time when the economy isn’t as strong as it has been is a welcome surprise.
In 1971, two Americans living in London, who wanted to enjoy a good hamburger, opened the first Hard Rock Café, and American-style diner, in an old Rolls Royce dealership in Piccadilly. The chain began its worldwide expansion in 1982, with locations in Canada, America, France and Germany. It has since opened franchises in Central and Latin America, Africa and the Middle East, the Far East, and the Caribbean.
There are a couple of small tweaks from the original operation, to take the local environment into account; the menu does offer upa few Nigerian dishes, and the music is more hip-hop than New Orleans blues, but all-in-all it is the real deal.
Lagos is a massive city, 20 million people some estimate, but the restaurant scene isn’t thatexciting. Even if just 1% of the total population is your target market, that’s a lot of people who like to eat out. But as hipafrica.com puts it “Lagos’ least strong point is its restaurant scene – it would seem that all the best cooking in town is taking place at home!”. That’s a bit extreme, hipafrica.com, and don’t let my (Nigerian) wife hear you say that!Lagos has come a long way since I first arrived here25 years ago, when the only international restaurants outside of hotels were Chinese or Lebanese. Today, most cuisines can be found in town, many more Chinese restaurants, which the local market really likes, as well as Indian, Japanese, Mexican, steak, fish and the rest. Fast food joints, or in the industry’s jargon quick service restaurants abound, with international brands such as KFC, Johnny Rockets, Barcelos, Steers, Spur, Dominos and others competing with local and well-established brands such as Mr Biggs, Sweet Sensation, Chicken Republic and Kilimanjaro.
And there are several home delivery services, such as HelloFood.com and NaijaEats.com, which enable people to avoid the traffic. They get pretty good reviews online, and the delivery charges are typically minimal ($1 or $2 on average).
Hard Rock Café is the first global chain to enter the Lagos full-service restaurant market, but we’ve had Rhapsody’s, a South African chain, for some time (they also have a restaurant in Accra). Many independent restaurants come and go, sometimes because the rent shoots up on renewal, and sometimes because they’re not supported by customers. I have noticed that their menus can be pretty similar, and the prices charged are over the top for what you receive, for both the food and the experience.
At the other end of the spectrum, Lagos is famous for its street food, found on every corner, with impromptu fires and barbecue set-ups serving big helpings of hot and spicy food for a dollar or two. Suya is one of the staples, strips of beef or chunks of chicken, with a special spice from the North, plus rocket-fuel strength “pepe” on the side. Then there’s fried yam, plantain and cow hide (recipe – boil for hours and hours, and serve with “pepe”!), all heavily spiced and filling. Now, a chef from Senegal has opened a restaurant, Nok by Alara, presenting street food as fine dining, appealing to the growing middle class who are seeking something better-presented, and are prepared to pay for it.
It’s not easy operating in Nigeria. Much of the food of the quality you need to operate a high-end restaurant cannot be imported, and many items are not made or grown locally. Most are available, at a price, but it is a moot point as to which side of the law you are on if you buy and sell banned imports.Trained staff are hard to find, and tend to be transient, just passing through the industry, constantly on the lookout for a cushy nine-to-five.Taxes are high, and there are numerous licences required to operate an establishment within the law. There is even a Merriment Tax levied by local governments on anyone holding a party in Lagos State, of about $50 for each gathering. This is truly a case of “If it moves, tax it. If it doesn’t move, tax it. Otherwise, you’re exempt”
But Hard Rock Café have cracked itwith a product quite different from anywhere else, as have all the other international brands mentioned above.Let’s hope for more, we’re ready and waiting for you!
Trevor Ward
W Hospitality Group, Lagos
