THE PROFITABILITY OF HOTEL BUSINESS IN NIGERIA

THE PROFITABILITY OF HOTEL BUSINESS IN NIGERIA 

Microsoft word encyclopedia defined hotel as a commercial establishment that provides lodging, food and other services to the public. The hotel business is an important industry in many countries, especially in those attracting a larger number of tourist. The Hotel properties act of 1956 also define a hotel as an establishment that provides food, drinks, and sleeping accommodation to any traveler if so desired who is willing to pay and he/she is in a fit (condition) state of mind (Brotherton, 2003).

Benefit of Hotel industry

It is also stated that the Hotel industry is a unique segment of a large collection of businesses referred to as the hospitality service industry. The hospitality services industry is composed of a broad spectrum of establishment offering rooms, food service, health care, transportation, and entertainment. The hotel business is distinguished from other hospitality enterprise. It ability to supply overnight accommodation and to provide its guests with a full line of goods and services.

Because these goods and services tend to have no lasting physical value, often, hotels are described as providing “experiences” rather than products. It is a combination of both tangible and intangible distinctions that leads to the conclusion that hotels provide to their guest with privileges, goods and services is not available elsewhere.

Research into the history shows that the hospitality industry took its root in the fact that people travel from one place to another for varying lengths of time. Thus, the provision of accommodation and feeding became very essential. As a result of this, restaurants and other hospitality products were located near stations and ports to serve food to people in transit. This led to the growth of the industry.

Hotel industry in Nigeria 

Hotel industry was introduced to Nigeria by a company known as “Nigeria Railway Caterers” which was jointly owned by “Mr. Robertiving” and the Nigeria railways by an agreement dated March, 1928. This company was responsible for the provision of catering services on the Nigeria railway guest house, which in 1945 developed to Kano Central Hotel.

In the late 1940s, Ikoyi Guest House now known as  Ikoyi Hotels was established and in 1960, Federal Palace Hotel was established. They catered for independence in 1962. In 1954 the Nigeria Railway caterers became what is now known as “Nigeria Hotel Limited”, a company which manages a good number of hotels in the industry including the above mentioned until recently.

However, from the point of view of the community, the purpose of a hotel is to provide certain facilities and services to its users. Hotel users who are buyers of overnights accommodation may therefore, be satisfied according to the purpose of their visit into the three main categories as holiday, business and other users. Holiday users include a variety of pleasure travel as the main reason for their stay in hotels, ranging from short stays in a particular location on the way to somewhere else to weekend and longer stays when the location represents the end of the journey. Business users are employers and others traveling in the course of their work, people visiting exhibitions, trade fair  or coming together as member of professional and commercial organization for meetings, seminars, courses, and conferences.

Hotel industry and  hospitality industry

Other use is comprises of visitors to a particular location for reasons other than holiday or business. For example, those attending such family occasions as weddings, parents visiting educational institutions, visitors to special events, and common interest groups meeting other than business and vocational reasons, relocating families and individuals seeking permanent accommodation in an area staying temporarily in a hotel, people living in a hotel permanently.

However, the state of health of the economy plays a significant role in the p profitability of hotel business. When the economy is buoyant, customer’s average spending power increases which leads to patronage. Hence, a profitable business. But when the economy is in a depressed condition the challenges of sustaining profitable hotel business therefore, will become greater. Hotel industry is a part of the hospitality industry mainly oriented towards the provision of recreation, amusement and accommodation. It maintains the facilities for the potential customers that are tourists and local people. This industry requires intense concentration on the facilities offered to the customers, so as to develop a good image in the competitive market. (Rutherford & O’Fallon, 2006)

The current business scenario accompanied by the economic depression has drastically affected the operations and business status of different industries. The hotel industry has also got affected by the economic depression. The collapse of social and economic infrastructure, especially power has castrated the economy. The resultant high cost of doing business together with the weak buying power of the populace has also adversely affected business. The manufacturers associations records showed that over 130 companies have fold up in the first half of 2000.

In terms of quality of life, Nigerians lag behind some other African countries on the competitiveness complied by the Harvard Institute of International Development with the World Economic Forum and the Swiss Business School. And also very concerned about politics at the expense making and/or looting money at the expense of enriching the purses and investment rather than creating a better living atmosphere and a better steady economy.