Hotel Room Rates May Peak After Nigeria's Successful Poll

 

As the 2015 general elections coast towards a peaceful end next week, hoteliers are hopeful of business returning to normal mid-April, especially room rates which have been dropping since the outbreak of the Ebola virus in the second quarter of 2014.

 

Standard room rates crashed from between $250-$300 to $150-$200 per night in most internationally branded hotels, due to huge check-outs by mostly expatriate clients and cancelled bookings by inbound guests because of the fear of post-election violence.

 

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The sad development saw most international brands operating below 40 percent occupancy rate and further made it difficult to meet their revenue targets in the first quarter of 2015.

 

“The world is surprised at the peaceful conduct of the elections in Nigeria. Most countries are relaxing their travel warnings against Nigeria at the moment, and our guests are beginning to validate their bookings, and organisers of local events are also calling back.

 

“There is hope of business picking up faster than most experts projected it”, a hotel general manager, who prefered not to be named, said.

 

He however observed that the rates would appreciate gradually and may peak to about $400 per night by October, if the dollar keeps rising or naira falling further.

 

But even when business improves, it is not going to be as usual because guests will be looking at hotels with the value for money offering, facilities and personalised services, explains Michael Ikpe, marketing manager of an international branded hotel in Abuja.

 

“The economic realities are likely going to push room rates higher this year. But the development will also give guests the opportunity to make choices because if a guest is paying as much as $400 per room for a night, the room facilities, services and stay must be worth the money, else they look for cheaper hotels at the expense of their comfort, but save money”, Ikpe said.

 

Speaking on the revenue loss during this extended low season in the Nigerian hospitality sector, Uche Ogbu, marketing manager of an international hotel brand in Lagos, said no hotel can boast of meeting its revenue targets in recent times in the country, with the tumbling occupancy rates occasioned by different events and timing.

 

In his opinion, what hotels need do is to review their strategies and business plans in a way to cater for situations such as extended low seasons.

 

The impact of the loss, according to Ikpe, is that most hoteliers may be starved of funds to start or finish some hotel projects in the pipeline. “Borrowing to build a hotel at 23 percent bank interest rate has never favoured hotel investors. Those who built hotels with bank loans may be under pressure now to repay because the expected revenue was not met for some months”, Ikpe explained.

 

The situation may also delay more rooms expected to be ushered into the Nigerian hotel market this year, their revenue, and most importantly, the employment opportunities they would have offered.