A growing economy and favourable investment climate has led to a rapid expansion in the number of hotel rooms in Nigeria.
This is according to the host of the West African Property Investment (WAPI) Summit & Expo, Kfir Rusin. With more than 9,603 rooms across 57 hotels planned by the world’s leading hotel brands such as Marriott, Radisson and AccorHotels, the country has many developers, investors and operators queuing up to strike deals across the West African nation.
Speaking ahead of the WAPI Summit, which will be held on the 15th and 16th of November, 2018 in Lagos, Trevor Ward, Managing Director of W Hospitality Group, said Nigeria’s obvious scale and increasing economic sophistication is fuelling the aforementioned expansion.
“Nigeria has, by far, the largest pipeline in West Africa, with Lagos and Abuja leading the charge. As a megacity, Lagos’ economic diversification, improving infrastructure of an international airport and deep-sea ports are all factors driving hotel growth,” Ward explained in a statement issued this week.
Ward stated that despite this transaction-heavy and deal-making environment over the past few years, the challenge has been transforming these deals into real rooms, which cater across a broad economic demographic from affordable to high end.
“The reality is that only 4,000 of these hotel rooms are under construction,” said Ward.
The paradox is that while deals have been signed between operators and developers, the funding environment remains compressed and the biggest challenge to overcome. This is despite the presence of global operators like Hilton, Marriott, and the Radisson rapidly expanding their footprint, but primarily focused on the top end of the market.
“There is no shortage of projects and developers, it is the finance that is in short supply. It is inconceivable that all the projects in the pipeline could be funded – if they were, and were built, there would be chronic oversupply,” he added.
According to the Managing Director, current demand is concentrated in the business and Meetings Incentives Conferences and Exhibitions (MICE) sectors, but the biggest opportunity is the economy or mid-scale markets. However, despite the potential offered by the economy or mid-scale market, international brands are focused on the high end of the market with smaller brands like South Africa’s Peermont, Southern Sun, City Lodge “making waves”.
In such an environment, one emerging segment of the hospitality industry poised to break out is serviced apartments.
One industry thought leader and serviced apartment pioneer intimately familiar with this emerging hospitality class is Abi Adisa, the Chief Executive Officer and Co-Founder of Amara Suites.
In such an unfolding environment, tech advances such as Airbnb can grow the business and highlights the flexibility which branded serviced apartments have over their competitors.
“Airbnb’s presence has increased the credibility of the product as an option for many users.” Adding that, “We definitely do less education about what the serviced apartment product is these days. Corporates, diaspora and locals are increasingly requesting for the product. Any hesitation at the moment in uptake is due to the limited brand presence in the market compared to availability of global hotel brands in the region,” Adisa elaborated.
The limited availability is something Adisa believes will soon change as more investors look to invest in line with global trends and greater profitability in serviced apartments.
“It’s only matter of time before we see dedicated investments in the space especially given the interest in real estate in general and the higher yields branded serviced apartment properties generate,” he stated.
“The opportunity in Nigeria for hotels is significant, but funding has remained challenging. This year, our hotel sessions will feature many international operators like the Radisson and Hilton together with industry experts such as Trevor Ward, JLL’s Xander Nijnens and innovators like Abi Adisa,” Rusin added.
“As the region’s largest and most concentrated gathering of local and regional real estate developers and investors, we believe that this year’s WAPI Summit will provide the platform for industry stakeholders to unlock the country’s hotel pipeline,” he concluded.