by: OKORIE UGURU
There was an air of euphoria and sighs of relief when the World Health Organisation (WHO) certified Nigeria Ebola Virous Disease (EVD) free last September. This was after the mandatory 21-day waiting period to see if the disease, which was imported into the country from Liberia, would resurface.
While Nigeria battled the disease from July through August and September, the industry most hit, negatively, by the Ebola outbreak, was the tourism and hospitality industry. Thousands of foreign tourists, mostly on business, left the country. They left behind thousands of empty bed spaces. Hotels also had cancellations in their event centres of programmes booked months earlier. Occupancy rate for hotels in Lagos, which hitherto had hovered between 75 to 90 per cent, for example, nosedived to about 15 per cent. Some even went lower than that. So, the announcement by WHO was like a kiss of life for the industry.
The tourism industry was not spared. Many tourism programme had to be either cancelled or postponed. The annual Akwaaba International Tourism Fair held in Lagos last month was almost cancelled but for the doggedness of its organisers. Initially, about 20 countries were billed to attend the fair, but at the end of the day, only Kenya, Rwanda, South Africa and Ethiopia participated. The organiser of the fair, Mr. Ikechi Uko, said at the peak of the crisis when countries started canceling their participations, he ended up being on admission at the hospital, having expended so much fund into the project. He said it was a miracle that the event survived the crisis. But he had to reduce the size of the fairground due to the cancellations.
Post Ebola business environment
Ordinarily, the clean bill of health given by the WHO should have signaled the return to business normalcy. But many expatriate investors and businessmen, who left the country in a hurry, are not in keen about returning. They are mindful of Liberia, Sierra Leone and Guinea that are still battling with the disease. They constitute the bulk of business for most branded hotels and top local hospitality outfits in the country. That is why top brands in the industry are passing through difficult times. Considering the fact that most costs in running a hotel are fixed with or without guests, the hotels are incurring enormous cost to keep their hotels open. The fear is that if the situation did not normalise in the next couple of months, many hotels will close down pushing thousands of people into the labour market. The grim reality is that if the situation does not improve, many hotel workers would be thrown into the labour market.
Long-term effect of the Ebola crisis on hospitality industry
Since 2008, Nigeria has seen a steady influx of top hospitality brands into the country.
Before then, the only top international hospitality brands were Starwood Hospitality Group’s Sheraton and Le Meridian and Hilton (which later pulled out) and then the Protea group of hotels from South Africa.
However, between 2008 and now, the industry has witnessed an explosion in international hospitality brands making in-road into the country. They include Four-Point by Sheraton; Southern Sun; African Sun; Radisson Blue; Marriot; Golden Tulip; Ibis; Luxury Collections; Swiss group and many others. It is no secret that the growth in the hospitality industry was helped by the Arab Spring. If the Ebola crisis is not tackled, all these gains may be lost.
The Managing Director of Swiss Hotel group, West Africa, Dr. Wasiu Babalola, explained the co-relation: “Let’s look at Arab uprising as an example. Leaders of about two or three countries were removed because of the Arab Spring, but are they steady? If you look at it, most investors moved their business because they thought it will be a short thing, it became long and we don’t know when it is going to stop.
“As business investors, they need to make money, so they moved practically all their events out of North Africa to sub-Sahara, especially West Africa. Those guys are here and they are comfortable, even when the crisis was over, they did not go back. When you look at a research that was done this year, as at three years ago, about three countries in North Africa (Egypt, Morocco, and Libya) had about 50 per cent of hotel development in Africa, and then Nigeria was ranked fourth in hotel development. But as at 2014, Nigeria is accounting for about 48 per cent of developments in Africa, that is based on signed contracts and so on while Egypt is far below. It means some of the investments that were planned for Egypt two years ago had to be moved away, and the same thing with this Ebola crisis. If we don’t try to build the confidence in the populace, investors and foreign travelers, they will look elsewhere.”
The attraction to Nigeria is the huge population, the steady economic growth, the oil money and to, a certain extent, Nigeria has become very popular for international conference tourism. Unfortunately, all these are evaporating into thin air as the Nigerian hospitality industry battles various problems. For them, the issue of safety has made profitability to pale into insignificance.
The Managing Director of HSSL Global, Nigeria’s first indigenous hospitality management group, Ayo Olowoporoku, put it thus: “This year has been challenging as a result of the Ebola outbreak. It has adversely affected business. Most of the people that use hotels come from other countries.
“They come by air, and if airlines are affected, it affects the industry. Ebola has affected travel generally. I, personally, have lost businesses, cancellations of reservations and so on, because companies cannot risk convening people in a venue. They don’t want to risk it. Even transient customers are refusing to come to hotels or places where they know they will meet with a lot of people. Everybody is running away. Hotels depend on social lives and ability of the people. We have been adversely affected.”
Babalola added his voice: “The Ebola crisis has actually affected the entire hospitality, tourism and leisure industry, not only in Nigeria, but all over West Africa. We are only fortunate that ours has been wiped out; we have a government that is pro-active to some extent.
“Ebola has affected the hospitality business directly, and possibly the tourism and leisure industry indirectly. Presently, most hotels are experiencing the worse case, even worse than the world recession. It has been recorded that even during global recession, when all other economies were reducing prices, Nigerian hotels were increasing prices. This is a kind of global epidemic that has actually affected hotel industry seriously. We are currently experiencing occupancy at the lowest ebb; we, the investors, are having terrible cash flow situations.
“There is no confidence anymore in the industry as it is. This has shown to me that customers value their safety. Safety is now a core, and that is the message they have passed across that Ebola is a safety issue and customers are particular about their safety.” When asked if the local market has also been affected, he said: “I can say it is both ends. When Ebola was still animal to man transmission, it was still a bit manageable, but when it became human to human…the hospitality business is about human beings, which is giving service to human beings, it became a very serious problem for the industry.
“You can see how parents revolted when government announced that schools should resume, they said no, we won’t. We know also people that took their children out of the country, saying whenever they get back, the children will continue with their schooling. Hospitality is human driven, not technology driven, you have to make contacts with human beings, because of that most of the foreign clientele had to leave. Even the local market, people said this is not the right time to organise any event, any retreat or anything.
“So, the corporate client that would have even sustained our economy is not even coming out because people would say Ebola is everywhere, we don’t even know who is carrying Ebola. It is not written on anybody’s face. That is why it is everywhere, the local market retreated into its shell and the international travelers are not looking at our way. That is where the government needs to start looking at the post Ebola effect which will be tougher than the Ebola crisis itself.”
So, how has the industry been coping with the dwindling revenue and cash flow as a result of Ebola? Most top hospitality outfits in the country are finding it difficult paying salaries of their workers. As at middle of last month, most of the hotels have not paid their workers September salaries. One of the leading non-branded hotels in Lagos based in Victoria Island has laid off all its auxiliary staff. There are threats that some workers would be laid off if the problem continues.
“It is so bad that most operators are making less than one-third of what they used to make, meanwhile the cost of doing business is still the same. We still need to run diesel and so on. At a point, the investor would need to make decision: which cost do I have control over? The first thing that comes to mind would be staff. The second thing that comes to mind is that let’s turn it to bread and breakfast hotel.
“We start sacking all the food and beverages department. As investors, there are options. If the government would allow us to get to that option, they are going to get a long-term problem on their hands, because they will start fretting where do we get jobs. It does not only affect the people we sack. Our third party suppliers will sack some people because the capacity for demand is coming down.”
Some of them complained about the issue of cash flow as a result of this low occupancy rate, they are asking for incentives like tax waivers for them to recoup some of the money they are losing.
However, Lagos State Commisoner for Tourism and Inter-governmental Relations, Mr. Disun Holloway said no: “there are no plans to that effect”. Adding: “We’ve not been approached with such request and we meet with them regularly. There are other things that will happen. The state government cannot, any time something happens in an industry, begins tax breaks and things like that. We quite appreciate what has happened in the industry and we will do our best to ensure that the period that they are going through does not turn into a period of massive unemployment. We are glad that, as at now, the hotel occupancy rate has begun to go up. So, we hope it will continue.”
Wooing back tourists
The hotels say they have not been sitting and waiting for their guests to return, rather they have been pro-active in wooing them back; telling them that Ebola has been wiped out of Nigeria. According to the Deputy General Manager of Southern Sun, Ikoyi, Mr. Cliff Shiridzinody, efforts to bring back guests would take at least, three months before yeilding results.
“You know it is not going to take just the next day for people to come. The damage was done. We are talking of health issues here, it will take three or four months for people to come. But what we have done is that we have taken all the cuts from the newspapers and e-mail them to the travel agents outside Nigeria and say this is what is happening in Nigeria. So, we are sending the cuts from all the newspapers to corporate organisations and travel agents in South Africa, because most of our businesses come from there, so that they can know the situation. But it is not uhuru yet, it is not going to be tomorrow, no, it will take long for the industry to stabilise again.
“When the news of WHO clearance came out, our head office in Dubai started sending out information to places where we source our market that Nigeria is Ebola free so that they can bring back the clients that we lost,” Shiridzinody said.
To get the industry back to its feet, according to Babalola, there is need for confidence building. “Building confidence to me is in three ways: we have the short, medium and long term. The short term has to be done by the government, which is two things. One needs to work with the private sector and internationally recognised institutes, such as the Institute of Hospitality, to do health and safety certification of our hospitality units.
“It is all about confirming to the world that our hotels are free, they are doing personal hygiene, food hygiene, and a certificate being displayed so that everybody will know that they have done this thing. The government needs also to go back to the media and make noise on a daily basis that Nigeria is Ebola free.
“I went to Google to get the names of Ebola country, Nigeria’s name was among, they did not even say Sierra Leone and other places, because that is not the market for the press. Nigeria is the most populous black nation on earth, so it goes beyond October 1st announcement by the President thanking everybody. No, the president, the governors and everybody needs to, on daily basis, tell the whole world that they are free to do their business in Nigeria without fear of any contagious disease, even beyond Ebola.
“We should also start talking about other things beyond Ebola. It is building confidence in the consumers and investors so that they don’t find a way to move their fund because if investors don’t get their returns, everybody has an exit strategy, they will move. So, for us to guard against it, the government needs to do that. Now, once you are making noise that Nigeria is Ebola free, talk to both the print and electronic media. Put it on the social media and foreign magazines; let’s do a campaign that we are Ebola free nation. This is a campaign the government can undertake for just three months and we will achieve result. While government is doing that, it will generate some level of demands. The local demands will get excited to sustain the industry pending when the big funding will come. You would remember that WAEC does their marking in Lagos. West African Surgeons also use hotels in Lagos.
“All these West African examination bodies come to Nigeria for their programmes. Since Ebola, all of them have moved out. So, if we don’t quickly do this, they may get comfortable wherever they are and may not come back. So, we need to quickly do that. That is in the short term.”
For the medium term solution, the industry according to Babalola, needs to look at the investors, who are crying for help, but not crying aloud because they still hope that normalcy would return. “But I pray it doesn’t get to the next two to three months. Probably the signal the government will see would be retrenchment of workers,” he said. The industry, he said, has been greatly affected by the stigma from the Ebola Virus Disease as some hotels that have suffered low patronage have begun to lay off some of their workers.
“Presently in the industry, we know of some of our colleagues that have laid off their temporary staff. They are keeping minimal staff; the basic workers, because patronage had dropped ridiculously in Lagos particularly, to between 20 to 30 per cent. Even some unbranded hotels are experiencing less than 10 per cent drop in patronage. It is so bad that most operators are making less than one-third of what they used to make, meanwhile the cost of doing business is still the same,” he said.