Nigeria’s
hospitality sector has been hit hard by the economic slowdown, with occupancy
rates in hotels falling below 35 per cent this year due to the contraction of
economic activities in the country.
Findings
showed that hardest hit were the four and five-star hotels in Lagos and Abuja,
where bookings have dropped significantly as individuals and companies now
prefer to book rooms at cheaper boutique hotels due to the economic crunch.
It
was gathered that while the occupancy rate of Southern Sun Hotels, Ikoyi has
dropped to about 45 per cent, the occupancy rate at the Intercontinental Hotel,
Victoria Island, a five-star hotel and the second largest property in Lagos, is
as low as 25 per cent.
Also,
the occupancy rate at Wheatbaker Hotel in Ikoyi is currently estimated at 30
per cent, Eko Hotel and Suites, Victoria Island, which boasts a combination of
four and five-star sections in its sprawling property, is down to 40 per cent,
while the Federal Palace Hotel, also in Victoria Island, has dropped to 35 per
cent.
In Abuja, the Transcorp Hilton, the largest property in the federal capital city, which over a year ago boasted an occupancy rate of 70-80 per cent, has seen a slight drop to 65 per cent.
A
company source said the reason the Transcorp Hilton has continued to attract
guests is because it had anticipated that the change in government last year
and dwindling oil prices would impact on the number of guests booked in the
hotel by the federal government, so it changed its marketing strategy by
targeting guests from the private sector.
The source, however, admitted that weekend occupancy rate at the Transcorp Hilton has dropped significantly, but is offset by improved room bookings on week days.
He
said the remodelling project currently being undertaken by the Hilton in Abuja
has also helped the hotel to remain relevant in the city.
Nigeria’s
third quarter real gross domestic product (GDP) growth data released on Monday
by the National Bureau of Statistics (NBS) showed that the country sank deeper
into recession, contracting by 2.26 per cent from -2.06 per cent in the second
quarter of this year, and -0.36 per cent in the first quarter.
The
contraction in GDP was largely driven by the militancy in the Niger Delta,
which resulted in a drop in oil output during the third quarter to 1.63 million
barrels per day (mbpd) and the decline in the oil sector’s contribution to GDP,
notwithstanding the rebound recorded in the agriculture sector.
The
latest GDP growth data further confirmed the level of weakness in the economy,
which has been hobbled by rising unemployment and job losses, declining
capacity utilisation, and acute foreign exchange shortage.
Owing to the sharp drop in hotel occupancy rates, a lot of the hotels have been forced to shed staff as they struggle to remain afloat.
“The
point is that a lot of the big hotels have continued to lay off their workers.
Like the Southern Sun and Intercontinental Hotel, they had to lay off some
workers because of the recession. Today, more people prefer to go to cheaper
boutique hotels, not exceeding N50,000 a night.
“They
now go to hotels which are rated two to three stars such as the Protea chain in
Lagos and Abuja. With less money, people would be booking them more,” an
operator who pleaded to remain anonymous said.
Speaking on the development, the Chief Executive of Financial Derivatives Company Limited, Mr. Bismarck Rewane, explained that the average drop in the occupancy rate across the large hotel chains could even be far below 35 per cent.
“If
you discount the flight crew rate, it’s even lower. That is because flight
crews are always offered cheaper rates. For instance, when a British Airways is
booking hotels, if a room is $200, they would pay maybe $100 or even $65
because they are paying for the whole year.
“So,
the cabin crew rate is always cheaper. If you discount the cabin crew rate, if
occupancy rate is about 40 per cent, they are down actually by 28 per cent.
“The
economic recession has finished them (hotel operators) completely. With three
consecutive quarters of increasing negative growth, that means some things are
not working right,” Rewane added.
Source:Thisday
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Business