Ever complained about Lagos hotel prices? A lot of people do! A standard room is going to cost you upwards of US$500 per night at the city’s leading hotels. Let’s be honest, none of these hotels can be said to be deluxe, and problems encountered by guests are frequent, ranging from power outages to water shortages and communication problems.
So why the “high” prices?
I’m currently working on a client’s proposed new hotel project in Lagos. It’s a basic “box”, a simple design, 120 rooms, restaurant, bar, a few meeting rooms, a gym, and that’s about it – a classic, upper midmarket product.
This hotel is going to cost DOUBLE what it would cost to build in South Africa. Because of: import duties, transport costs, contractor margins, inefficiencies, the weather, unnecessary stoppages on site due to bureaucratic interference, etc etc. And because a hotel in Lagos, and anywhere else in Nigeria, needs to be entirely self-sufficient in power (three generators, with extremely expensive control panels) water (at least two boreholes, with water treatment plants) and waste (a dedicated sewage plant).
And generators are horrible things – they sit there drinking diesel, eating batteries, and funding the lavish life style of the various engineers who “mend” and “service” them. They blow your light bulbs, destroy your DVD players, and generally wreak havoc. Oh yes, and they are an essential piece of equipment to run a hotel. A hotelier friend recently complained that his energy costs were 18 per cent of revenue. Ouch. A London hotelier is screaming when it goes above 4 per cent.
So you see the problem? Very high build costs, and an environment which contributes to high operating costs as well. Those are two of the things which drive high hotel prices. The third is supply and demand. If you are still prepared to pay those prices – and what choice do you have? – to do business in the most dynamic economy in Africa, and one of the top three or four in the world, no hotelier is going to say no to your money.
Next time you hand over US$500 for a “standard” room, it may not be any more palatable, but perhaps you can spare a thought for the poor old hotelier, filling up his generator’s diesel tank and calling the engineer for yet another replacement part.
W Hospitality Group, Lagos