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Wednesday, February 1, 2023

Nigeria Hotel Industry in Tailspin from Coronavirus Outbreak

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The performance of operators in the Nigeria hotel and hospitality industry has worsened as coronavirus outbreak takes a toll on global and regional economies.

For instance, the four dominant players in the industry (Transcorp Hotels, Tourist Corp, Ikeja Hotels, and Capital Hotels) recorded combined losses of N8.89 billion as at June 2020, the worst results in five years.

Similarly, they saw a 24.70 percent reduction in revenue to N14.03 billion as at June 2020, from N18.63 billion the previous year, according to data compiled by MoneyCentral.

Nigeria’s hotel occupancy fell below 30 percent, according to recent data from the Nigerian Tourism Development Corporation (“NTDC”).

Nigeria’s hospitality sector is the hardest hit from the Covid-19 crises as government was stricter with Hotels, bars, and public gathering during the lockdown period that crippled businesses activities in major cities.

At the zenith of the pandemic, travels were being shut down while airlines shuttered, which dealt a great blow on the cash flows of companies that were forced to lay off thousands of workers across the globe.

In the first two months since the global lockdown went into effect, the Nigerian travel industry lost more than N180 billion and thousands of jobs, according to Bankole Bernard, Chief Executive Officer of Finchglow Travels Limited/FCm Nigeria and former President, National Associations of Nigerian Travel Agencies (NANTA).

According to a recent data from the National Bureau of Statistics (NBS), unemployment rate hit all-time high of 27.10 percent in the second quarter of 2020, from a low of 5.10 percent in the 2010.

The economy may contract by as much as 3.4 percent this year, according to the International Monetary Fund (IMF).

Analysts expect the country to slip into a recession, the second in five years as foreign investors continue to dump shares on the back of lack of transformation policy and poor corporate performance.

Nigeria’s Hotels industry woes are symptomatic of a global phenomenon.

According to African Union (AU), African countries lost up to$55.0 billion in travel and tourism revenues in three months. This was as the International Air Transport Association (IATA) estimated that the international tourist arrivals in Africa could decline between 1.0 percent to 3.0 percent in 2020.

The Travel and Tourism industry contributes over €150.0 billion to Africa’s economy, according to the World Travel & Tourism Council.

In the U.S., hotels and travel firms sought $250 billion from the federal government to help cope with a virtual travel shutdown.

Marriott Hotels Internationals, an American based company that serves customers worldwide, has been forced to close roughly 25 percent of its 7,300 global hotels, including about 1,000 in the U.S. The company has also furloughed tens of thousands of workers.

Analysts at United Capital Limited are of the view that the recovery of the African travel and tourism industry will vary from country to country, depending largely on the international visitor’s confidence in the measures put in place by the various governments within the continent.

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