• Login
  • Register
Nairametrics
  • Home
  • Exclusives
    • Financial Analysis
    • Corporate Stories
    • Interviews
    • Investigations
    • Metrics
    • Economy
    • Nairalytics
  • Markets
    • Currencies
    • Cryptos
    • Commodities
    • Equities
      • Company Results
      • Dividends
      • Stock Market
    • Fixed Income
    • Market Views
    • Securities
  • Sectors
    • Agriculture
    • Aviation
    • Company News
    • Consumer Goods
    • Corporate Updates
    • Corporate deals
    • Corporate Press Releases
    • Energy
    • Entertainment
    • Financial Services
    • Health
    • Hospitality & Travel
    • Manufacturing
    • Real Estate and Construction
    • Renewables & Sustainability
    • Tech News
  • Business News
    • Budget
    • Public Debt
    • Funds Management
    • Tax
  • Financial Literacy
    • Career tips
    • Personal Finance
  • Lifestyle
    • Billionaire Watch
    • Profiles
  • Opinions
    • Blurb
    • Op-Eds
    • Research Analysis
  • Recapitalization
    • Access Holdings Offer
    • Fidelity Bank Offer
    • GTCO Offer
    • Zenith Bank Offer
  • Home
  • Exclusives
    • Financial Analysis
    • Corporate Stories
    • Interviews
    • Investigations
    • Metrics
    • Economy
    • Nairalytics
  • Markets
    • Currencies
    • Cryptos
    • Commodities
    • Equities
      • Company Results
      • Dividends
      • Stock Market
    • Fixed Income
    • Market Views
    • Securities
  • Sectors
    • Agriculture
    • Aviation
    • Company News
    • Consumer Goods
    • Corporate Updates
    • Corporate deals
    • Corporate Press Releases
    • Energy
    • Entertainment
    • Financial Services
    • Health
    • Hospitality & Travel
    • Manufacturing
    • Real Estate and Construction
    • Renewables & Sustainability
    • Tech News
  • Business News
    • Budget
    • Public Debt
    • Funds Management
    • Tax
  • Financial Literacy
    • Career tips
    • Personal Finance
  • Lifestyle
    • Billionaire Watch
    • Profiles
  • Opinions
    • Blurb
    • Op-Eds
    • Research Analysis
  • Recapitalization
    • Access Holdings Offer
    • Fidelity Bank Offer
    • GTCO Offer
    • Zenith Bank Offer
Nairametrics
No Result
View All Result
Home Opinions Blurb

Are foreign investors avoiding Nigeria’s hotel sector?

Op-Ed Contributor by Op-Ed Contributor
July 2, 2017
in Blurb
Are foreign investors avoiding Nigeria’s hotel sector?
Share on FacebookShare on TwitterShare on Linkedin

Recent reports of a “crash” in foreign investments into Nigeria’s hotel sector are rather wide of the mark. Here is why;

A general decline in FDI (not just hotels)

Foreign Direct Investment (FDI) is always rather “lumpy”, coming in chunks of several million, or in some cases several hundred million, at a time.  This is the same for any industry.  The data from the Central Bank of Nigeria show FDI into hotels of a massive US$45 million in 2007, reducing to zero in 2008.  Not a crash at all, it takes time to absorb that kind of amount into new developments, which in this case were likely to have been the InterContinental Hotel and the Federal Palace, both in Lagos.

RelatedStories

Hospitality

Hospitality Businesses vs. Customers: Renewed Social Reality!

July 26, 2024
12 words you need to delete from your CV in 2023

12 words you need to delete from your CV in 2023

December 27, 2022

Nothing much in 2009 either, with a little in 2010 and 2011, rising again in 2012 and 2013 as Tsogo Sun bought the Southern Sun Ikoyi, and then nothing much again to the present day.

Look at the figures for agriculture – US$82 million in 2013 and then less than US$25 million in 2014.  Oil & gas – US$208 million in 2014 and then only US$30 million in 2015.  It’s the same up-and-down scenario that the hotel industry has experienced.

Hotel investments are more domestic than foreign

In the hotel industry, and this is true pan-Africa, there is very little foreign investment in hotel development or acquisition, and globally less than 5 per cent is cross border.  Almost without exception the hotel industry is developed and owned by HNWIs or groups of investors based in the same country.  There have been a couple of acquisitions recently by Quantum – the InterContinental Lusaka and the Mövenpick Accra, which are foreign investment (originating from Angola/Mauritius), and those will show up in the records as equally “lumpy”!  So the FDI data tell only one (small) part of the story, funds from domestic sources represent by far the largest investments in hotels.

Hotel investments in Lagos

I also want to address the perception that the Nigerian hotel industry is struggling because too many hotels have been built.  That is just not the case!

Lagos has witnessed the greatest expansion, with several new international brands entering the market in recent years.  Abuja has had less development activity, although there are many projects on the books.

Before the building boom of the last decade, Lagos was severely under-hoteled, with only three branded hotels, in a city which now has a population of some 20 million people, and is said to be the 5th largest economy in Africa.  The number of “quality” hotel rooms (my own benchmark) has increased from around 1,000 in 2003 to around 4,500 in 2017, with the largest increases occurring in 2008, 2010 and 2011.

In the “2-noughties”, occupancy rates in the leading hotels were above 80 per cent, which means they were full almost all of the time.  Even when new hotels were opening – the Federal Palace in 2008, the Southern Sun in 2009, the Radisson Blu in 2010 and the InterContinental in 2013, amongst others – average occupancy rates were still in the mid-60s.

Too many hotels but not over supply

Are there too many hotels in Lagos at the moment?  Well, yes, compared to demand levels, but that’s not the same as oversupply – the industry is suffering from a severe downturn in the economy, officially 5 consecutive quarters of negative GDP growth (Q1-2016 to Q1-2017 inclusive), and almost certainly negative as well in Q2-2017.  The reduction in occupancy rates shows the close correlation between the health of the hotel industry and the state of the national economy.  We expect an upturn in demand when the economy recovers – and there are already signs of increasing demand in the early months of this year.

Finally

The hotel industry is complicated, and needs to be understood better, to avoid misleading headlines which can depress investor confidence.  Hotels are an essential part of the commercial infrastructure of any city, and there is a virtuous circle – without them there will be no economic growth, and economic growth benefits the hotel industry.

 

Trevor Ward, Managing Director, W Hospitality Group

Lagos, Nigeria

The W Hospitality Group specialises in the provision of advisory services to the hotel, real estate, tourism and leisure industries, providing a full range of services to our clients who have investments in the sector, or who are looking to enter them through development, acquisition or other means.  In sub-Saharan Africa we are regarded as the market leader due to the market and financial expertise of our staff, our worldwide knowledge, and our commitment to our clients. 

www.w-hospitalitygroup.com

Tags: DeepdiveHospitalityNigerian HotelsReal Estate News
Op-Ed Contributor

Op-Ed Contributor

Nairametrics frequently publishes articles from experts such as financial analysts, economists, researchers and investors. We also feature articles from guest writers and bloggers who wish to push their views and opinions through our platform. To get your articles on Nairametrics, kindly send an email to info@nairametrics.com and we will publish it within 24 hours of approval by our editorial team.

Related Posts

Hospitality
Digital Media

Hospitality Businesses vs. Customers: Renewed Social Reality!

July 26, 2024
12 words you need to delete from your CV in 2023
Financial Literacy

12 words you need to delete from your CV in 2023

December 27, 2022
Real estate sector c
Real Estate and Construction

Outlook for the Lagos Real Estate market in the second half of 2022

July 3, 2022
Renting a house
Real Estate and Construction

Is Real Estate a good hedge towards inflation in Africa’s real estate?

June 17, 2022
Nigeria's real estate, COVID-19 forces tenants to request moratoriums from property owners
Lifestyle

Real Estate: What US$100,000 can buy you in African cities

June 5, 2022
Nigeria’s real estate industry
Metrics

Promo: Best real estate deals you don’t want to miss

May 24, 2022
Next Post
Saka Who? Etisalat Claims 50% Lead In Ported Numbers

Another Bailout? CBN/NCC said to take up board position in "New Etisalat"

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Emple
nlng
first bank








DUNS

Recent News

  • President Tinubu summons emergency FEC meeting to honour late Muhammadu Buhari 
  • Africa needs gas as a transformational fuel for development – Sahara Group 
  • FG to pilot 6-month training for 3,000 artisans in 10 construction trades across 3 states  

Follow us on social media:

Recent News

President Tinubu appoints 6 Chief Medical Directors for federal hospitals on 4-year terms 

President Tinubu summons emergency FEC meeting to honour late Muhammadu Buhari 

July 13, 2025
Africa needs gas as a transformational fuel for development – Sahara Group 

Africa needs gas as a transformational fuel for development – Sahara Group 

July 13, 2025
  • iOS App
  • Android App
  • Contact Us
  • Home
  • Markets
  • Sectors
  • Economy
  • Business News
  • Financial Literacy
  • Disclaimer
  • Ads Disclaimer
  • Copyright Infringement

© 2025 Nairametrics

Welcome Back!

Login to your account below

Forgotten Password? Sign Up

Create New Account!

Fill the forms below to register

All fields are required. Log In

Retrieve your password

Please enter your username or email address to reset your password.

Log In
Social Media Auto Publish Powered By : XYZScripts.com
No Result
View All Result
  • Home
  • Exclusives
    • Financial Analysis
    • Corporate Stories
    • Interviews
    • Investigations
    • Metrics
    • Economy
    • Nairalytics
  • Markets
    • Currencies
    • Cryptos
    • Commodities
    • Equities
      • Company Results
      • Dividends
      • Stock Market
    • Fixed Income
    • Market Views
    • Securities
  • Sectors
    • Agriculture
    • Aviation
    • Company News
    • Consumer Goods
    • Corporate Updates
    • Corporate deals
    • Corporate Press Releases
    • Energy
    • Entertainment
    • Financial Services
    • Health
    • Hospitality & Travel
    • Manufacturing
    • Real Estate and Construction
    • Renewables & Sustainability
    • Tech News
  • Business News
    • Budget
    • Public Debt
    • Funds Management
    • Tax
  • Financial Literacy
    • Career tips
    • Personal Finance
  • Lifestyle
    • Billionaire Watch
    • Profiles
  • Opinions
    • Blurb
    • Op-Eds
    • Research Analysis
  • Recapitalization
    • Access Holdings Offer
    • Fidelity Bank Offer
    • GTCO Offer
    • Zenith Bank Offer
  • Login
  • Sign Up

© 2025 Nairametrics