A recent Lagos hospitality report from Estate Intel has revealed that the sector is showing signs of resiliency in spite of the devastating effects of the COVID-19 pandemic. The report’s reflected that, despite the volatility caused by the pandemic, the real estate market had focused on sustainability, with positive trends appearing in the vast majority of the sectors observed. It also noted that despite oversupply concerns, the sector had outperformed key global centres in revenue. Even in the residential sector, demand continues to outpace supply, especially in the low and middle price market.
The report titled “2023 Lagos Development Pipeline Report Hospitality Overview: How does the business sector drive the hospitality industry?” asserts that the hospitality industry in Lagos is one of the few that has managed to thrive despite the economic downturn. In addition, it mentioned that in 2022, average occupancy rates hit a 10-year high of 68.4%, according to figures from W Hospitality Group. Also, in 2022, Lagos surpassed major international hotspots like Dubai, London, New York, and Hong Kong in terms of revenue per available room, having grown by 43% from the base year of 2019.
77% of hotel sales and demand in Lagos comes from organizations.
According to a study conducted by W Hospitality Group, 77% of hotel sales in Lagos come from organizations. This success was then linked back to surging demand, particularly from business and domestic tourists, against the backdrop of a restoration post-pandemic. The development pipeline accounts for about 36% of total stock, so this growth is expected to continue in 2023 despite concerns about an increase in supply. However, only 20% of the growth pipeline is being built now.
Folorunsho Coker, the head of the Nigerian Tourism Development Corporation, said that despite a 60% increase in revenue, the expansion of the industry was impeded by the global economic downturn. He stated that a global recession restricts growth and screws up the supply of funds and goods around the world. Holidays are not a priority because of the high unemployment rate, low earnings, and limited spending power. Coker asserts that refloating economies is the primary method for combating depreciation and emphasizes the importance of significant public investment in infrastructure projects.
Rising interest in visiting Nigeria contributes to the sector’s growth.
Similarly, Justina Ovat, the vice president of the Federation of Tourism Associations of Nigeria South-South and president of Women in Hospitality Nigeria, said that the sector had been hit hard by the COVID-19 pandemic due to the restrictions placed on travel and tourism. She noted that rising interest in visiting Nigeria has contributed to the expansion of the sector in recent years. Data from the Nigerian Bureau of Statistics shows that the sector expanded by 3.8% in 2019 and contributed 4.8% to the nation’s GDP. However, the pandemic greatly constrained travel and tourism, reducing revenue for the sector.
Efforts have been made to revitalize the industry regardless of the challenges the pandemic has caused. The Sustainability Plan is one such initiative that the Nigerian government has launched to assist small and medium-sized hotels. Also, to persuade customers and maintain their business, a number of hotels have instituted preventative health measures, such as routine cleaning and disinfection of their facilities. She asserts that, as one of the sectors hardest hit by COVID-19, the industry still needs to recover fully.
Many businesses were forced out due to the pandemic restriction.
Lastly, Ovat explained that, like several other nations, Nigeria’s industry was severely impacted, and the strain was felt even more acutely because there was little or no aid. Many businesses have closed their doors, some temporarily and others permanently. Nonetheless, there are signs of improvement due to numerous interventions, such as vaccines and enhanced hygiene in healthcare facilities. Since 2021, when restrictions on foreign travel were relaxed, the industry as a whole, including hotels and restaurants, has typically been operating again.
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