2016 PERSPECTIVES FOR NIGERIA’S HOSPITALITY INDUSTRY

THE AFRICAN HOSPITALITY STORY

A CASE FOR AFRICA- According to the World Tourism Organization (UNWTO), Africa’s strong

performance in 2014 (up 4%) makes it one of the world’s fastest-growing tourist destinations, second only to Southeast Asia (up 6%).

- A total of 65.3 million international tourists visited the continent in the last 2 years – 200,000 more, than in 2013. Back in 1990, Africa welcomed just 17.4 million visitors from abroad. The sector has therefore quadrupled in size in less than 15 years

- More tourists also mean more jobs. Across the continent, there are around 20 million people working directly or indirectly for the tourism industry. This means that the sector accounts for 7.1% of all jobs in Africa

- The travel and tourism industry is responsible for directly generating105.4 million jobs, equating to 3.6% of the world’s total employment. Of this amount, Africa tourism generates 8.7 million jobs.

- Tourism, perhaps more than any other sector, has the potential to achieve the vision and objectives of NEPAD and the AU Agenda 2063 as it can dynamize other sectors of the economy. Africa remains one of the fastest-growing bases for the travel and tourism sector globally.

UNLOCKING NIGERIA’S POTENTIAL

International demand to Nigeria is driven primarily by Europe and Asia including: France, China and Germany. These three countries represented nearly 60% of business travel locally last year.

Stay unit nights were lower than we anticipated, 1.6 million vs the 1.8 million projection. The occupancy rate averaged below 50% (PWC report). Room revenue declined by 2.0% compared to the projected 8.5% increase. The three- and four-star hotel market was particularly hurt as revenue fell 7.7%

Yet Nigeria has the highest migrating population with a total of 16% of its citizens moving in and out of the country each week.

To prevent capital flight and meet the growing demand, Nigeria’s travel and hospitality industry needs to take advantage of the increasing opportunities by improving systems through innovation and tested technology. According to World Travel and Tourism Council, 53% of travel booked around the world in 2016 is expected to occur online.

NIGERIA’S GROWTH CHART

Source: Wilkofsky Gruen Associates

FACTORS AFFECTING THE SECTOR

• Rising inflation affecting the cost of doing business

• New foreign exchange restrictions likely to impact inflow of foreign investments

• Higher tax duties imposed on smaller segment of the market now a growing concern

• Greater government policy on standard hotel classification

• Solving the infrastructure challenge

THE FUTURE LOOKS GOOD• Although we expect the sector to grow by double-digit rates

in 2018-19, we also forsee a periodic drop in the short-term. For the long-term period, we expect the situation to improve as we record a 6.6% compound annual rate to 2.2 million in 2019 from 1.6 million in 2014

• With Nigeria having the highest room rates in Africa, we expect the prices to keep growing with projected increases averaging 2.7% compounded annually over the next four years.

• The number of hotel rooms will more than double during the next five years with that growth occurring predominantly in Lagos. There will be an estimated 10 000 rooms in 2017, up from 8 800 in 2014, a 20.7% compound annual increase.

• This increase will be well below the expected growth in room availability and occupancy rates will plunge, falling to 25.3% by 2018 before edging up to 26.8% in 2019.

• Growth to multiply by 10 times from 2014 and 2016

• New offices to open globally, active in more than 40 countries including South Sudan and Somalia

• New partnerships

• Product : Innovative technology such as the iOS App, Extranet V2, Channel Manager, Hotel Manager application & many more

• Operation : Focus on empowering hotels to take charge Jovago, Better Revenue Management , Automation of daily operation, Greater scalability, Customer friendly payment solution , simple booking process & using more of SMS for the benefit of Customer

• Marketing : By the end of 2016 Jovago Brand awareness to increase 10 folds . Hence huge marketing spent is in pipeline

• Multiple awards won in 2015 and recent Consumer Protection Award in less than 6 weeks of 2016

• Support the Nigeria’s transition from a business destination to leisure

AFRICA’S VISION