> Growing Pains In Lagos

Growing Pains In Lagos

The hotel industry in Lagos is experiencing some quite extraordinary “growing pains” right now.

A bit of history– when I was first travelling from my London base to Nigeria in the early 1990s, getting a room in a decent hotel (and there weren’t many of them!) was a real struggle, with occupancies in the high 80s year round.  Then came the Abacha years, which followed the annulment of the 1993 election - Nigeria was suspended from the Commonwealth, BA stopped flying, and occupancies were down to about 50 per cent.  From the return to civilian rule in 1999, Nigeria was “back in the fold”, there was massive investment in all sectors of the economy, including hospitality, and occupancies climbed to above 90 per cent in 2007/08.  New branded hotels started to open, but occupancies were still perfectly respectable, around the mid-70s.

Then came 2014, our annushorribilis, and a combination of security concerns and the Ebola crisis hit the hotel industry in Lagos, and across the West Africa region, for six.  People were just not travelling, neither from outside Nigeria nor within.  There was a complete lack of confidence, and in the extreme companies forbade travel to Africa.  Full stop.  Interesting, that in a year when Nigeria was declared the largest economy in Africa, and with the economy of Lagos State growing at at least 10 per cent annually, the hotel industry was back in the dark days of the mid-1990s, so far as business levels were concerned.

There were encouraging signs of a recovery in the last couple of months of 2014, and hoteliers report that January 2015 was above expectations –low expectations, granted, but above them all the same!

What of the prospects for 2015?  There has been a loss of confidence in West Africa generally, because of the Ebola crisis, but also because of Boko Haram’s continued assaults.  Previously confined to northeast Nigeria and to Abuja, they are now spreading their evil to Cameroon and Niger.  The US government is warning against travel to many parts of Nigeria, and there are also fears of post-election violence in coming weeks.

Then there’s the severe drop in the oil price, with Big Oil reducing expenditure, which knocks on to the hotel industry in Lagos, and in other cities on the west coast.

Confidence takes a long time to build, and an instant to crash – and by and large it is completely outside the hotel industry’s control.  In Lagos, and it affected Accra last year too, we have yet another problem, with the labour unions flexing their muscles against hotel owners, resulting in the closure of the Radisson Blu, the temporary closure of the Federal Palace (now reopened), and unrest at other hotels.

Who’d want to be a hotelier?!

Well, many people would!  The industry has an inevitable cyclicality, its fortunes go up and down, with the ups always more than the downs.  The number of rooms in branded and other major hotels in Lagos has increased from about 1,000 in 2003 (the year I moved here) to 4,300 today, yet occupancies were still perfectly respectable until last year.  Supply growth is nothing like what it was in the last decade, with just 62 branded hotel rooms due to open in 2015, in Mantis’ The George in Ikoyi.Our roller-coaster ride is nothing to do with over-supply!  Openings later in this decade couldinclude Fairmont, Marriott, Holiday Inn, Le Meridien and others, but it does take an awfully long time to get a hotel up and running in this town!

If Nigeria can hold a credible and peaceful election, can continue on a growth phase, if the oil price rises again, if Boko Haram can be repelled, if……..well, if West Africa, and Africans, can do what they always do, and prove how resilient they are, our industry will get back on track, and be where it was in 2008 – booming!

Trevor Ward

W Hospitality Group, Lagos           

trevor.ward@w-hospitalitygroup.com

 

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Plot 10, Ayo Babatunde Crescent, off Oniru Market Road, Lekki Phase 1, Lagos, Nigeria
+234 (01) 295 6236
info@w-hospitalitygroup.com

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