The Managing Director/Chief Executive Officer of W Hospitality Group, Ward Trevor, speaks with JOSEPHINE OGUNDEJI on the state of the hospitality industry, among other issues
What are the key regulations governing the Nigerian hospitality industry, and how are these things impacting the sector?
The nature of the hotel industry anywhere in the world means that it receives attention from virtually every government ministry, department and agency. A hotel is a living piece of real estate; unlike buildings such as offices, warehouses and retail stores, it is working 24/7, with thousands of moving parts. In a large hotel, for example, thousands of guests are checked in. It needs regulation! The building needs to be safe, not structurally unsound, and in the event of a fire emergency the occupants should have adequate means of fighting and escaping from the peril. It needs to have a safe working environment, during construction and after opening. And it needs to be safe for guests to use, safe from any contamination from the consumption of food and drink. It also needs to be safe physically from attacks and so on. Enlightened governments will see regulation not only in terms of mitigation of risk, but also as a promotional tool, trumpeting the industry as a great employer and therefore job creator, and the destination as a great place to visit, therefore encouraging foreign exchange earnings and tax revenues. A recent example is how governments such as Turkey promoted hotels and resorts in the country as being “COVID-19” safe, with the Ministry of Tourism and Culture there certifying hotels under a “Safe Tourism” brand, to alleviate any worries potential guests might have had about infection.
But, of course, regulation can go too far, particularly when MDAs see the industry as a soft touch. We are a highly visible industry, we want to be seen by our guests, it’s part of our marketing industries. But unenlightened MDAs, particularly at a state or LGA level, will see a hotel with guests coming in and going out as an easier target for regulation than other businesses. That leads to unfair and unreasonable levies, taxes and duties, and often duplication between MDAs.
For example, checking and certifying a borehole and the water treatment plant are good but charging for the water extracted is an issue. Why would you insist that an elevator has a government inspection stamp when the proof of manufacturer’s regular servicing would suffice in other jurisdictions? Why would you suggest a hotel needs a nightclub licence because there is background music in the lobby and restaurant? These are real examples of overregulation, and lead to the conclusion that the industry is merely being tapped for revenue from the charges levied for the various licences. What the MDAs don’t realise is that policies such as these are self-defeating, hotels have high operational costs anyway, and adding to them through overregulation will drive some owners out of business.
According to a report by PwC, the Nigerian hotel industry was worth $1.3bn in 2019, and is projected to grow at 6.5 per cent between 2020 and 2025.What is the current size and value of the hotel industry in Nigeria, and how is it expected to grow in the coming years?
There is some publicity value in such numbers, but I don’t know how the figure is derived. It is very difficult to count all the hotels in Nigeria or even in Lagos. Then, how do you determine their revenue? And where do you draw the line on what actually is a hotel? I’m not aware that there is any definition of “a hotel” in Nigeria. Do you count the 670-room Transcorp Hilton in Abuja as a hotel? Yes, of course! What about a 4-room guesthouse in Ibadan? Why not if it provides overnight accommodation and food? If you do include it, how are you going to identify all of them in the 36 states plus the FCT?
In terms of growth, there’s a linkage between an economy’s GDP growth and the health of the hotel industry, but I’m always wary of these macro ratios – be assured that the hotel industry in Sokoto behaves very differently to that in Lagos, and even in the latter there are different submarkets, e.g. Ikeja, Victoria Island and Lekki, which have different characteristics.
How has the COVID-19 pandemic affected the hospitality industry in Nigeria, and what measures have hotels taken to mitigate the impact?
While the pandemic will probably never “end”, the virus is here to stay, the negative impacts on the hotel industry’s operations in Nigeria are, by and large, behind us. During the pandemic, hotels were initially forced by the government to close (with some exceptions, for essential health and other workers needing accommodation).
Aside from the pandemic, we have inflation, interrupted supply chains, food shortages and others challenges that affect businesses. There are other factors that affect not only hotels’ operations but also construction, with prices soaring, particularly for imported material.
What are some of the unique challenges faced by hotels in Nigeria, and how can these challenges be addressed?
We have some major challenges, but I doubt that any of them are unique to Nigeria! I have already mentioned some of the overregulation that can occur, they don’t just affect cost but are also highly time-consuming for management and owners. Lack of public infrastructure is a problem, with hotels in all cases needing to be self-sufficient in terms of power generation, water and gas supply, even in some cases the highway itself. Operating diesel-powered generators is a must. There’s the scarcity of foreign exchange. We build in dollars, because so much needs to be imported for the development of a hotel, and some operating costs are also in dollars or Euros, and getting hold of them can be near impossible sometimes. Cash is the lifeblood of any business, particularly a hotel. But hotel managers are resilient and resourceful, and they get on with it, 24 hours a day, seven days a week.
How are hotels in Nigeria responding to the changing preferences and expectations of Millennial and Gen Z travelers? What strategies are they adopting to appeal to these demographics?
In my opinion, the categorisation of guests with such labels as “Millennial” of “Gen XYZ” is of less use to the hotel industry than it is to, say, media or entertainment. What is important to a hotelier is the motivation for staying at the hotel, and what that implies. Agreed, younger travellers are more tech savvy (and demanding) than some older ones, but that’s a sweeping generalisation, which is also unhelpful when the requirement is to be laser-focused on the markets that are specific to your own hotel. Whatever the market, an online presence is essential for success, the basics being a website with a booking channel – I just don’t think that a Facebook page or Instagram really does the job, especially when there’s no call to action or ability to “click and book”.
Security is a major concern for hotels in Nigeria due to the prevalence of crime and terrorism in the country. What measures are they talking to ensure the safety of their guests and staff?
Security is a major concern for hotels anywhere globally. There’s an increase in terrorism activity. unfortunately, hotels can be favoured targets for attacks because they are visible. Also, High profile/newsworthy occupants can be the targets too. In Africa, Mogadishu is a case in point, where there have been frequent bombings of hotels there, with government officials and foreigners injured or killed. To my knowledge, there have been no attacks on hotels in Nigeria, although maybe there have been and they have not been reported (an unlikely scenario). Any owner or manager who appreciates the risk to staff, guests and the property from attacks will “de-risk”, with visible and less visible security measures, creating “rings of security” around the property, to stop intruders at various points, starting with the road outside. There’s visible security, such as locked gates and uniformed personnel, barbed wire on walls, baggage and personnel scanners, and then there’s invisible security – a hotel I have worked with has cameras covering every single square metre of the property, no blind spots.
It’s not just physical security to consider, there’s also financial and data security, and anti-theft. Implementing and operating proper systems and procedures will mitigate the risk of all three, and then there are those all-seeing cameras, inside and out (but not in guest bedrooms!).
How are hotels in Nigeria addressing the issue of talent management, and what strategies are they adopting to attract and retain top talent?
The global hotel industry faces labour shortages, with a considerable “fall-out” directly caused by the pandemic, where laid-off staff have not returned to the industry. That has been less of an issue in Nigeria, unemployment levels are high, and there’s no shortage of applicants for any vacancy, but the skills shortage is acute. With notable exceptions such as chefs and reception staff, we don’t need highly-skilled people, but we do need basic personal skills and habits, and that’s where the challenge lies for Nigeria’s hotel managers and owners. Each publicised vacancy can attract literally hundreds of applicants, of whom only a handful can read, write and speak good English, have even a rudimentary knowledge of basic arithmetic, and a knowledge of personal hygiene. We’re a business, and whilst we have a social responsibility to the community, which includes employing disadvantaged people, we are not a charity and cannot be expected to completely make up for the shortages in the public education system.
Having said that, there are some fantastic men and women working in our hotels, who genuinely care about their job, their employer, the guests they are hosting and the other staff they are working with, and they are to be celebrated. It behoves employers to look after those individuals, to nurture that caring. All too often I have come across hotel owners who see the staff as being an expensive inconvenience, to be discarded at whim, hardly a sustainable business practice, and one which tarnishes the industry as being a bad employer, which is not the case. We need more hospitality training schools like Wavecrest College in Lagos, which makes its own contribution of skilled staff for the industry, but it’s a drop in the ocean compared to the industry’s needs.