After being negatively impacted for two years by the epidemic, the Nigerian hospitality industry had a significant upturn in the first half of this year.
According to stakeholders, the industry saw an increase in business operations, a return of international visitors and business travelers, as well as increased corporate and government patronage of both independent and foreign brands, which led to a 70 percent average occupancy rate in H1.
Business activity increased during the year under review to levels close to those of 2019, notably among the big international brands, with Transcorp Hilton Hotel Abuja taking the lead in revenue growth.
The half-year saw consistent occupancy rates of between 70 and 80 percent across major multinational brands and 50 to 60 percent across several independent hotels, a sign of the sector’s quick rebound from the COVID-19 pandemic’s lasting effects.
When H1 2022 results are compared to those from the same periods in the two previous years, H1 2020 saw the sector’s worst H1 performance ever, with zero revenue during the three-month lockdown caused by the pandemic that forced all hotels to close, resulting in over N50 billion in lost revenue.
Earnings fell short of the N20 billion threshold established by industry stakeholders for the first phase of recovery in the H1 of 2021 as the sector struggled to survive while dealing with the pandemic’s aftereffects, travel limitations, health, and safety concerns, and low purchasing power.
Even though H1 2022 revenue for the industry was over N30 billion, almost twice as much as H1 2021 revenue, it was still below the 2019 levels of over N60 billion, which were considered the highest before the pandemic disruption.
The group generated great success in its electricity and hospitality businesses, which continued to function brilliantly despite the challenging operating climate, said Owen Omogiafo, president/group CEO of Transnational Corporation Plc.
According to Transcorp’s half-year statistics for the fiscal year that concluded on June 30, 2022, all of its main investment lines had increased performance.
Omogiafo noted that Transcorp Hotels Plc, the company’s hospitality division, “recorded a revenue growth of 173 percent over the same period last year, demonstrating a strong and sustained recovery from the impact of COVID-19 pandemic, leveraging innovative strategies and superior customer experience.”
The Radisson Hotel Group in Nigeria also reported that H1 2022 experienced a performance improvement.
The business at the Radisson Blu Hotel Ikeja in Lagos was reportedly brisk in the first half of the year with consistent occupancy, according to Christophe Noel, general manager. “At this point, I am unable to say that we have been seriously impacted. He stated, “We have good occupancy.
He claims that the Radisson Hotel Group’s five-year plan on significant investments, new brand architecture, new IT systems, new revenue management systems, and a new loyalty program, along with their flexibility in approach and ability to adapt, respond, and implement measures quickly, have helped to keep guests coming and the hotel focused and afloat despite the economic headwinds in H1 2022.
At the Radisson Blu Anchorage in Lagos, Wellington Mpofu, executive assistant manager, commercial, reported that occupancy remained between 60 and 70 percent in H1 2022, which is nearly the same as the pre-pandemic level of 2019.
The improvement, according to him, was due to “the system returning to normalcy and the hotel’s personalized service and world-class facility offerings, which has the best waterfront in Nigeria.”
According to Emmanuel Ele, CEO of hospitality consulting company Six Regions Hotel, hoteliers are back on track and have established a few new establishments recently, while those that had closed during COVID-19 have now reopened.
However, many hoteliers are worried that the sector’s development prospects in the second half may be dimmed by rising operational expenses, soaring inflation in the nation, and political dangers ahead of the 2023 elections.
Oluomo Jamiu Talabi, CEO of Bosede Talabi Guest House in Ojota, Lagos, and president of the Lagos Hoteliers Association, bemoaned how the high cost of running a hotel is negatively affecting the industry and forcing many to raise prices, close their doors, or turn their establishments into real estate.
He believes that the rising cost of operation puts operators in a difficult situation and makes the rest of the year unpredictable because it appears that there is no way to reduce costs, particularly those related to diesel.
Brain Efe, general manager of Victoria Crown Plaza Hotel in Victoria Island, Lagos, stated that the industry would probably have a more difficult situation in H2 as a result of the exorbitant price of diesel.
“Hotels were closed during the lockdown and the sector managed the unfortunate situation,” Efa said. “However, it will be worse when your cost of operation is so high and you cannot transfer it to the customers who are also affected by low purchasing power.”
He is concerned because many claims that raising prices is the only way for hotels to survive and he has asked how high rates may go up before losing customers.
He does not have high hopes for the second part of the year, given the growing amount of economic challenges.
The Radisson Hotel Group intends to react to the economic situations appropriately to maintain its viability and ensure that guests continue to get the highest caliber of hospitality during their stay at any of its hotels in Nigeria.
Although the Transcorp CEO predicts a higher second-half performance, he adds: “We do not plan to rest on our laurels, and we will continue to outperform past performances.”