A third of hotel projects in Lagos have been put on hold, slowing the pace of new supply in the city’s hospitality sector.
This is according to the Estate Intel 2025/2026 Lagos Real Estate Pipeline Report, which suggests that the development may be linked to rising construction costs and macroeconomic pressures affecting the timing and execution of planned hotel projects across the state.
The report highlights both challenges and opportunities, noting that while some projects face delays, Lagos remains a key market for hospitality investment due to strong business demand and strategic location advantages.
What the data is saying
Data from the report shows that 33% of the total hotel development pipeline in Lagos is currently on hold, reflecting a gap between announced projects and active construction among operators.
- “Lagos’ hospitality sector is driven by business and corporate activity, supported by proximity to international airport infrastructure. Enhanced location accessibility across key commercial districts reinforces the market’s attractiveness to domestic and international visitors.”
- “Data from Estate Intel shows that over 33% of the total pipeline has been put on hold, indicating a lag between the pipeline and active construction among hotel operators. These delays may be a result of macro-economic conditions and high construction costs,” the report read in part.
Despite these delays, the report notes that Lagos remains West Africa’s largest hotel pipeline market by volume, with strong business and corporate demand supporting long-term sector performance.
Market performance and outlook
The report shows that Lagos hotels have experienced strong pricing power and stable occupancy rates in recent years. Average daily rates (ADR) rose from N83,105 in 2023 to N205,534 as of October 2025.
- Occupancy rates stood at 66.7% in October 2025, with projections for the coming years in the late 60–early 70% range.
- Larger supply additions in the short- to mid-term have increased competition among short-let operators and standard hotels, with anecdotal evidence from December 2025 showing mixed occupancy trends.
- Featured pipeline projects include Novotel Hotel (Ekulo Group) – 170 keys, completion Q1 2027; Hyatt Hotel Ikeja (Sentinel Hospitality Limited) – 142 keys, completion Q1 2026; The Nook Hotel (Blaid Group) – 130 keys, completion Q4 2028; and Best Western Ikeja (Rebuild) – 90 keys, completion Q4 2026.
The report projects a positive market outlook, noting that limited high-quality completions over the next few years will help maintain market balance despite ongoing delays.
More insights
The pause in Lagos’ hotel project pipeline mirrors broader trends across Nigeria’s hospitality sector.
- The Hotel Chain Development Pipelines in Africa 2025 report by W Hospitality Group showed that Nigeria dropped to third place in Africa’s 2025 hotel development pipeline, with 48 projects and 7,320 rooms planned. Previously ranked second, Nigeria was overtaken by Morocco, which recorded 13 hotel deals in 2024 compared to Nigeria’s five.
- Egypt remains the leader, accounting for 32.5% of Africa’s planned rooms, four times Morocco’s total.
- Rising construction costs in Nigeria, particularly for essential materials, could be contributing to delays in some Lagos hotel projects.
These trends suggest that while Lagos continues to attract development, macroeconomic pressures may slow the pace of delivery in the short term.
What you should know
A Nairametrics investigation in October 2025 highlighted sharply rising steel rod prices in Nigeria, a key driver of construction costs.
- Smaller rods (10–16mm) have increased by 210% over the past two years, while larger rods (32mm) are up 175%.
- The price of 10 mm rods jumped from N335,000 per tonne in 2023 to N1,040,000 in 2025, putting significant financial pressure on building projects.
These cost increases may have prompted developers to adjust building plans or delay projects, affecting timelines for several hotel constructions.
The surge in material costs highlights the challenges facing Lagos’ hospitality sector, even as strong business demand and strategic location continue to make the city a prime investment destination.
