An Eye on West Africa

171

Lagos has a population of some 20 million people (estimates differ, but that seems to be a rough average).

It accounts for around 40% of Nigeria’s GDP, it’s got the busiest airport by far, seaports, and several local conglomerates and multinationals are based there. The list goes on – yet the city is averaging just one branded hotel opening a year currently, and the average size of those hotels in the past three years was just 53 rooms!

Sure, I know that Nigeria’s economy has been in the doldrums for a while, but even so, Lagos does better in most respects than the national average.

This year’s opening, in mid-July, is the Providence Hotel in Ikeja, not far from the international airport, in a district that now has a wide-ranging hotel offering, including the historic Sheraton on the main airport road, the more recently-opened Radisson Blu, its neighbour the renamed Radisson, and the L’eola Hotel.

The 79-room Providence Hotel is, like the L’eola, managed by Mantis, a South Africa-based operator which Accor bought into last year. That means that the two hotels benefit from the Accor distribution systems and that guests can accumulate Accor Rewards points, just like at the other Accor hotels in Nigeria (Mercure, ibis, Novotel) and elsewhere in West Africa.

Nothing else looks set to open this year, whilst in 2020 we should see the 250-room Marriott opening, also in Ikeja. Also mooted, but not definite, are the 164-room Radisson Collection in Ikoyi and the 96-room extension to the Legend Hotel at the international airport (a Curio Collection by Hilton), which was last year’s sole opening. Potentially quite a few rooms then in Ikeja and the nearby airport environs, but does this mean that there will be an oversupply of hotel rooms in the area?

Well, at least in the short-term, the answer to that must be ‘yes’, although I’m not clear what a good definition of the term ‘oversupply’ would be. Hotels are being opened all the time, everywhere (well, not so much in Lagos, apparently), and when a hotel opens it inevitably takes business away from existing hotels and therefore occupancies, and often also prices, drop.

But oversupply is a temporary phenomenon – it’s part of the economic cycle which hotels are a part of. Organic growth in demand tends to sort it out, especially as new investors are deterred from the market and planned projects are shelved. Further, more supply can actually create demand, due to the increased spend by the existing and new hotels on marketing the destination. And the addition of new rooms can mean that larger events, such as conventions, can be accommodated.

In the airport area, with the availability of more rooms at different price points, passengers may well choose to stay overnight before departure or on arrival, particularly given Lagos’ unpredictable traffic and the fact that some people travel a long way from out of town pre or post-flights.

Oversupply is less likely, because so many new hotels are delayed way beyond their original scheduled opening date. According to the international and regional (African) hotel chains, they expected to open 115 hotels (throughout the whole of Africa) last year, but only managed to open 46, a realisation rate of just 39%. In some cases, the planned hotels don’t get completed at all – visitors to Lagos may or may not be aware that the mess called the arrivals pick-up point at the international terminal was actually once the location for a planned Holiday Inn hotel, or that the abandoned buildings opposite the MM2 domestic terminal were supposed to have been a Crowne Plaza hotel. The former definitely won’t happen, and the latter seems pretty unlikely.

We’ll get there one day and there’s no shortage of new hotels planned for Lagos – at last count there were 27 new properties (including extensions to existing hotels) with 4,500 rooms in the Lagos pipeline.

Nope, zero chance of them all happening, so let’s not get too concerned about that ‘O’ word!