Nigeria’s hotel sector – justified optimism or wishful thinking?
With the emergence of COVID-19 as a global pandemic it may now be quite hard to imagine any positive estimates of economic expansion, let alone the travel and tourism sector, almost regardless of the part of the world in question. However, there were times when optimistic forecasts were made and supported by even such relatively conservative institutions as IMF and African Development Bank, and the case in point was Nigeria’s hospitality industry.
Double digit growth
According to the recent report by PwC, Nigeria’s hotel sector expanded by 20% between 2017 and 2018, making it Africa fastest-growing accommodation market. Being quite a big increase on its own, its merits were not yet included into the Nigeria’s National Bureau of Statistics ‘s estimates of the sector’s contribution to GDP standing at 34% as of 2017 and employing 20% of the workforce nationwide, making these figures a likely underestimate. Such strong performance is supported by the extensive pipeline – 26 new properties are scheduled to enter the market by the end of 2020. Given such a sweeping success one cannot help but wonder what its main drivers are.
Domestic market and evolving energy resources
While Nigeria has a lot to offer to international travelers, its growing middle class, which now constitutes almost a quarter of the total population, should not be left out of the picture. As the country’s internal logistical networks are improving and becoming more accessible, and disposable incomes generally on the rise, domestic travelers are slowly growing into a force to be reckoned with. This effect is amplified by the diversification of the energy mix and the overall government’s willingness to move away from oil and gas dependence, which in turn allows for cheaper energy costs – both for the hospitality suppliers and their potential guests.
Looking into the future
Given the current circumstances, it is only natural that many industry experts are wary of short-term forecasts. However, looking at the trustworthy predictions unadjusted for the covid-19 crisis outcomes, could still prove useful, even if only to catch the underlying market trends. As such, PwC suggests a 12% per year growth in Nigeria’s hospitality sector between today and 2023. Will this double-digit unadjusted figure be enough to cover the pandemic’s blows to the industry? Only time can show but starting with a strong foundation should definitely give Nigeria a bit of a head start.