Hospitality sector struggles under economic problem

ng hospitalityFrom OKORO CHINEDU in Lagos, Nigeria
LAGOS, (CAJ News) – NIGERIA ’s hospitality industry has been hit hard by the current macro-economic challenges.

The sector has not been spared the challenges that have seen consumers reduce spending.

“We suspect that the hotel and restaurant segment in particular is experiencing these difficulties,” First Bank Nigeria said in its latest markets report published on Monday.

The financial institution said the squeeze in consumer spending had forced households to revise their spending priorities.

“As such, industry players are tasked with identifying innovative methods to retain and if possible increase their clientele.”

FBN pointed out the recent inflation data released by the National Bureau of Statistics showed that restaurant and hotel prices rose by 1,1 percent month-on-month in January (unchanged from the previous month).

This component has a 1,2 percent weighting in the index.

The issues surrounding foreign currency exchange sourcing across the country have had a strain on the industry.

“For restaurants, imported goods contribute significantly to their cost of doing business. Many have been forced to revise their menu prices upwards,” FBN said.

FBN said generally, five-star hotels in Lagos charge room rates in United States currency.

“Based on our channel checks, the Naira is trading at N270 to the dollar (36 percent higher than the official rate) at some of these luxury hotels.”

However, despite the current headwinds, the sector is still attracting investment from private equity firms, the institution said.

“In Q3 (third quarter) 2015 the sector contracted by – 5 percent year-on-year. In spite of the general economic slowdown, the untapped potential in this industry is significant; this bodes well for investment in the longer term,” FBN stated.

CAJ News

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Posted by on Feb 22 2016. Filed under Africa & World, Featured, Finance, Finance & Banking, National, News, Regional. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

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