JOSEPHINE OGUNDEJI writes on how the COVID-19 pandemic has impacted the hospitality industry as new businesses spring up to replace those shut 

Nigeria was expected to be the fastest-growing hospitality market with a projected 12 per cent compound annual increase from 2019 to 2023 according to a PricewaterhouseCoopers projection.

However, in early 2020, the COVID-19 pandemic struck and the hospitality  industry was one of the worst hit.

According to a report titled, ‘Hospitality Outlook: 2019-2023,’ Nigeria, Kenya, and Mauritius had the fastest-growing markets with increase of 20.0 per cent, 14.6 per cent, and 11.7 per cent, respectively, in 2018.

Growth in Mauritius was due to a large increase in average daily rates.

It stated, “During the next five years, we expect Nigeria to be the fastest-growing market with a projected 12.0 per cent compound annual increase. A number of new hotels are scheduled to open in the next five years, which will accommodate further growth in guest nights without putting upward pressure on the average daily rate.”

The sector barely recovered in Q1 2021 as it continued to battle the fallout of the pandemic, travel restrictions, health and safety concerns, and low purchasing power to stay afloat, leaving earnings below the N20bn mark set by industry stakeholders for the first phase of recovery in the H1 of 2021.

However, the sector earned more in Q1 2022 with over N30bn revenue, which almost doubled Q1 2021 earnings.

 Yet, the figure fell short of the 2019 levels of over N60bn, which was adjudged the highest before the pandemic disruption.


The Chief Executive Officer, LGC Hospitality, Ore Okuboyejo, noted that businesses in the industry wound up after the pandemic happened.

Okuboyejo said, “From my knowledge, in general, we saw a lot of businesses fold up but some others were still birthed. I can say for a fact that despite the COVID-19 pandemic, we had a large percentage of hospitality ventures coming up.

“Two new hotels are within the Victoria Island space, and we have opened four restaurants within the last two years. There is hope for the future because we now take wiser decisions. The first wave of COVID-19 taught us many valuable lessons and there are tons of projects from beach resorts to hotels popping up in the near future.

“However, most ventures were affected by a lower purchasing power of the naira; most of their customers lost their jobs or earned less, which affected revenue streams from businesses.

“Hotels took a big hit and so did tourism due to the movement restriction across the nation. Although from my personal observation, niche-oriented businesses in the food and beverages space either recouped their losses by creating higher price points and upping their game, which is better service birthing more value for money.”

According to him, there is still a big downtime and it will get worse.

The founder, Kitchen Warrior, Motunrayo Adisa, asserted that hospitality was one of the industries hugely affected by the pandemic and it had been a great challenge adapting to the new reality and fighting to move things back to how they used to be.

She said, “I will say the industry has not fully recovered; the effect of the economic deterioration in Nigeria has added to the problem; we all know how much airfare costs now. The food and beverage sector is not left out; prices of foods and drinks are increased due to the high cost of items.”

The Chief Executive Officer, Interstates Architects, Olusegun Ladega, noted that there was a time when the hospitality industry was booming because of the number of hotels coming up.

“Now, there’s been a bit of a slowdown in the hospitality and leisure sector, but I expect the industry to wake up soon,” he added.

The Convener, Eko New Year Festival, Ozo Idezuna, said since 2015 till date, there had been no enviable record of tourism development in Nigeria.

He said, “Importantly, after the pandemic in 2020, the industry has not been able to get its footing. Since 2015 till date, tourism domestic development is poor. The last time we had foreign visitors was in 2014, and the issue of foreign exchange in Nigeria is a key concern.

“Every day, we are losing money in the hospitality industry; the economy does not help matters. For the past seven years, the Ministry of Information and Culture, which the hospitality industry falls under, is next to nothing. In addition, the Nigerian Tourism Development Corporation is poorly funded.”

While also attributing the setbacks faced by the industry to COVID-19, the co-founder, Twins Tourism, Taiwo Oguntoye, asserted that the sector was gaining ground before the pandemic struck.

“There is a positive indicator towards full recovery of the industry because hospitality and tourism generally were badly affected by the pandemic.

“However, with the ease of movement and restrictions, the industry should fully recover this year. The high and unpredictable cost of diesel is killing and eating deep into the profitability of the industry, among other things,” he added.

According to the tourist, the industry is grossly under-regulated, and there is still a lot to learn as a country.

He said, “The nation is still having issues of uniformity in classification and rating. In regulation, we still have lessons to learn that can enhance our improvement. “

In the same vein, the Chief Executive Officer, MAD Hospitality, Mary Dinah, insisted that the industry had not fully recovered from the aftermath of the COVID-19 pandemic.

According to Dinah, the industry is insufficiently regulated compared to international practice, which is contributing to the setbacks.

She said, “For example, you should have a star rating guide, which is consistent and based on certain stringent rules. Unfortunately, that has not been added to the regulatory policies in Nigeria.”

The Director of Samantha Lifestyle Group, Dumebi Agbakoba, said there was a feeling of recovery to begin to explore, invest and enjoy what the hospitality industry had to offer.

She added, “It is certainly not on the verge of collapse but incredibly tougher in recent years. Many businesses have unfortunately had to shut down, downsize or relocate because of reduced consumer demands, and restrictions on spending and travel.

“The key thing is finding new ways to attract customers and generate revenue, but this requires a lot of effort put into marketing, which requires bigger budgets that some may just not have.”

The founder, Corner Restaurant, Omasan Okorodudu, said the outcome of the general elections would affect the hospitality industry.

She said, “I think this election period is going to be very critical because of whoever Nigerians vote in. If the next president sees the value in the industry, not just during holiday but all year round, things will be better. If there are incentives for business owners and an improvement in the minimum wage, or if we start to produce more locally and things become more affordable for Nigerians we will move forward. As a society, we like to have a good time; we like to enjoy ourselves. This is also one of the things people come to the country to do, especially Lagos State. I do not see a collapse anytime soon.”

Okorodudu noted that while parts of the industry were regulated, others remained under-regulated.

 “In addition, any drop in the value of the naira is automatically reflected in the cost of goods. My hope is that the government takes into account these changes when they are coming to us for taxes because of the margins that I was receiving when diesel was at a lower cost than what it is right now. I cannot be paying the same amount of taxes when I’m not even receiving as much; if there is a balance between taxes collected and the challenges we have as business owners, I believe there will be better synergy between the government and taxpayers,” she added.


Way forward

Okuboyejo noted that it was safe to affirm that despite the cost of living, reduction in overall salaries of most people, and poor Gross Domestic Product per capita, people were most likely to spend where there was not just value but an unforgettable experience.

He said, “Collaborations between businesses, in various ways, shapes, and forms are important; the more open we are about coming together to form a board that protects us from exploitation from external bodies, the more efficient our systems will be.

“The welfare of employees is key; people in general need to be aware that staffers are human beings and so are hospitality workers. You will travel abroad and see a university student working part-time; that is the same scenario here. The nicer we are to human beings, the better we get out of them. Hence, a happy workforce makes a healthy business.”

The Regional Chairman, Institute of Hospitality UK-Nigeria, Professor Wasiu Babalola, explained that the industry had gained a major recovery for the economy despite being under the heat during COVID-19.

He said, “However, the hospitality industry has not fully recovered in terms of occupancy but it is moving to full recovery. The average rate has gone up in Lagos, Abuja, and Port Harcourt, while the secondary and tertiary states are still price sensitive; recovery activities have been punctured by the e-naira policy.

“In 2023, the industry looks to recover except for the postponement of the governorship election, which affected the industry; but we should pick up towards the end of 2023 and 2024. However, this will also depend on the economic policy of the incoming government and other financial regulation and policies.”

According to Babalola, professionalism in the industry is on the verge of collapse.

“The hospitality industry is recovering beyond expectation. However, looking at other issues that have affected the industry, there is a dearth of professionalism when we look at the quality of our service, hotel rating in Nigeria is zero; it is not uniform and most of the states are doing whatever they like by just focusing on revenue generation via taxes and rates without paying attention to the service delivery and the rating of hotels. Hence, professionalism in the industry is on the verge of collapse, particularly considering the recently enacted bill creating confusion within the industry.

“In addition, the current devaluation of the naira is advantageous to some extent because it will avail foreigners the opportunity of having more money to spend when they travel down to Nigeria and hotels are also benefiting from it. However, the exchange rate is affecting the purchasing power of Nigerians.”

Hospitality sector needs support

For Adisa, a lot needs to be done. She said, “In the hospitality industry, what we sell to our guests is service.  How this service is offered determines a whole lot. It can mar or make the industry. There is a need to develop strategies that reinforce customers’ quality experience at all times, and there is a need for constant employee training and motivation, among others.”

Oguntoye said that while the industry was gaining momentum to perform optimally, there was the need for regulators to be intentional about performance.

He said, “Also, we all need to support the industry both in our private and public capacities. Let the government review multiple taxation issues, improve on security, make forex available to players, and create a more conducive environment for the industry to grow. Importantly, each state should support more creative and tourist events that can drive patronage, and the government should engage industry players and stakeholders.”

The Zonal Coordinator, South West, Nigerian Tourism Development Corporation, Rotimi Aiyetan, noted that the industry had not yet fully recovered from the pandemic.

He said, “With the inflation trend in Nigeria, there are times I wonder how people own hotels or make it in the industry, coupled with the fact that energy is crucial to the sector and very epileptic. Also, the turnover of personnel in Nigeria is high because of lack of professionalism; the large part of workers in the hospitality industry are unskilled.”

On the way forward, he emphasised that training and re-training were crucial, adding that investment would also go a long way.

“The industry is capital intensive. However, there are some hotels that are not really affected by the pandemic. The Ministry of Tourism, Culture, and Hospitality and the NTDC came up with a global conference in line with recoveries, and a technology solution was launched to develop applications to proffer solutions to these challenges,” he added.

While insisting that the hospitality industry had recovered by 60 per cent, the Director-General, NTDC, Folorunsho Coker, said global recession was holding back the growth of the hospitality sector.

He said, “Global recession holds everything back; it disrupts capital and supply flow. There is a high level of unemployment; fewer earnings, less spending power and holidays not being a priority.”

On the way forward, Coker advised that refloating economies was the general tool for depression, adding that large-scale government spending on infrastructure projects was essential.

In his part, the Executive Director of the International Hospitality, Tourism and Sustainability Forum,  Chibuikem Diala,  said 2019 was the last “normal” year for the sector, noting that it was an impressive year with many prospects.

Lamenting the challenges, facing the industry, he said, “Travel and hospitality go hand in glove. Nigeria and Nigerians are very resilient people with an overcomer’s spirit. So, in my opinion, the hospitality sector has overcome the immediate impact of COVID-19 but is yet to fully recover from the long-term impacts of the pandemic.

“It is worth mentioning that during COVID-19, and while international restrictions still remained, Nigeria’s population and fun lifestyle inspired domestic travel and patronage of hospitality businesses. People traveled locally and empowered local businesses thereby sustaining them.”

However, he noted that many hotels, especially those in the South-East and parts of the North, had yet to scale up to pre-COVID-19 levels.

Also, he highlighted that many employees who lost their jobs during the period were yet to return to work as there were fewer opportunities because of the low scale of operations.

“Hospitality businesses now cut costs by downsizing staff and reducing operational expenses,” he added.

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