Growing interest in hospitality sector
Investors’ interest in Nigeria’s hospitality sector in the past couple of years has been encouraging. It has led to the development of a good number of hotels of international standard in the country’s major cities.
Many international hotel brands are looking to capitalise on the country’s emerging economy. Nigeria’s GDP is growing at approximately 7 percent per annum and this growth can be gleaned from rising demand in residential and commercial property, high traffic at the airports and increased activities and volume of trade at the seaports.
As an emerging economy with young, growing population and rising urbanisation, we see demand always outstripping supply and, according to STR Global, a sister company of HotelNewsNow.com, while hotel demand in Lagos increased 7.3 percent in 2012, supply growth during the same period was 6 percent. This invariably creates opportunities for investment.
In 2012, a number of new hotels opened in Lagos including Four Points by Sheraton Lagos, Ibis Lagos Airport, and Radisson Blu Anchorage Hotel, while a new one being promoted by African Capital Alliance in Benin City will open for business next month.
Many more are in the pipeline and these are being promoted by international brands including Carlson Rezidor Hotel Group, Hilton Worldwide, InterContinental Hotel Group, Starwood Hotels & Resorts Worldwide, Hyatt Hotels Corporation and Protea.
Demand for hotel rooms in Lagos, Nigeria’s commercial nerve centre, increased by 7.3 percent in 2012, according to David Grossniklaus, an analyst. Some 5,000 new hotel rooms are expected to open in Nigeria by 2017. This prediction signals the immense opportunity knocking on the doors of Nigeria’s economy and calls for sticking to policies and building institutions to implement and sustain them.
However, there are headaches. Investors generally complain of Nigeria’s harsh business environment which, according to Obiageli Ezekwesili, former minister of education, in a paper she presented at a conference recently, adds about 15 percent additional burden to the cost of doing business in the country. The real estate sector in Nigeria is bogged by government policies bordering on land titling, documentation, building approval and others which take forever to get from the relevant agencies and departments in government circles.
We contend that realising Nigeria’s potential requires a government committed to creating the enabling environment for investment. With planned privatisation of the Federal Housing Authority and the Abuja Commodities Exchange, we see a renewed effort at reform, despite the intractable privatisation of the power sector.
Security is also critical, and we advise that all effort to contain insurgency in some parts of the country should not just be sustained, but also taken a step further to ensure that local and foreign investors are assured of the safety of their investment.
Similar urgency should be directed at developing human capital in these new and fast growing sectors of the economy – apprenticeships for school leavers that combine on-the-job training with classroom theory will ease the skills mismatch significantly. We would like to see a situation where the growth in these sectors impacts a sliver of the economy, but by extension, the lives of a broader base of people.