Trevor Ward is the Managing Director, W Hospitality Group, a leading global hospitality consortium operating out of Nigeria. Ward’s in depth insight on Nigerian and African hospitality market is acknowledged globally, a position that is further confirmed by his yearly Hotel Chain Development Pipelines in Africa, a seminal and insightful report that has become like the Holy Grail in the hospitality business.

In this interview, Ward shares his insight on the hospitality business in Nigeria in 2025, with the projection of a positive outlook.

What is your outlook for hospitality investment in Nigeria in 2025?
Based on the trends of the past 10 years, I would say that the likely outlook for 2025 is a positive one. If you look back to 2014, when there was an outbreak of Ebola elsewhere in West Africa, coinciding with an oil price crash and the economic recession in Nigeria until early 2017, the hotel industry, measured in terms of occupancy/demand, bounced back quickly, and was still experiencing growth in early 2020.
Then came the global COVID-19 pandemic, but again, Nigeria’s hotels recovered earlier than most global markets – by the end of 2023 Lagos and Abuja were in the top five cities worldwide in terms of performance compared to 2019.
Whilst Nigeria is experiencing serious economic challenges right now, and the hotel industry is not immune to these challenges by any means, the data on Lagos and Abuja indicate that revenues are at an all-time high, with above-inflation increases, rooms’ revenues up some 70% on last year, whilst further increases of that magnitude are unlikely.
I do see continued growth, with no great challenge for owners from increased supply diluting occupancies. One main reason for that is the lack of affordable finance for new development, but that also has implications for the renovation that a hotel needs every few years; we all know of hotels that are badly in need of refurbishment, but for which the capital is not available. That’s a problem for the owners, the guests and for the industry as a whole.

Are there more rooms to grow in Lagos? What does the hotel pipeline for the city look like?
For sure! It’s a city of some 20 million people, with only 18 branded hotels (about 2,400 rooms). There is a multitude of non-branded hotels, many of good to excellent quality, but the penetration of the brands – nearly all of whom want to be in Lagos – is just scratching the surface.
Did you know that the last hotel with an international brand to open in Lagos was the 250-room Marriott in Ikeja, over three years ago? The chains’ eagerness to be in Lagos is shown in the development pipeline – there’s a total of 3,867 rooms in 26 new hotels (including one extension to an existing one) in the development pipeline of the international brands in Lagos (as of Q1-2024), compared to an existing inventory of around 8,000 “acceptable” rooms (including major unbranded hotels such as the Eko and the Lagos Continental).
But note that a pipeline is not the same as hotels opening. Of those 26 projects, only nine are “actively” under construction, work has started on site on seven other hotels (but sometimes started many years ago) but has stalled (also several years ago in some cases), and work has yet to commence on the remaining 10 projects.
Two new hotels that look like they will open in 2025 are the Hyatt Regency in Ikeja GRA and the Best Western Plus in Ikeja central – fingers crossed that they actually make it across the line.

What cities or locations do you see having the most undiscovered potential or scope for future supply for the hotel market in Nigeria?
Lagos of course, but also Abuja, which is curiously under-hoteled as far as the chains are concerned – the last internationally-branded hotel to open was the Fraser Suites in 2018. Radisson Hotel Group has three properties in their development pipeline there, with a total pipeline (including Radisson) of 13 hotels (2,500 rooms) planned – of which only about one third are under construction.
Outside of the major cities, I still think Calabar has great potential, after a decline when the pro-tourism governors left. There’s a bit of a chicken and egg situation, with potential travellers needing new flights to get there, and the airlines needing passengers before they start on the route, or increase frequency. I hope this will soon be resolved.
I was recently in Kano, a great city, with room for more hotels, and a client is looking to plug some of that gap. That’s just one of about 40 cities in the country (36 state capitals plus Abuja and some other major urban centres), all of which have visitors requiring overnight accommodation.
It’s hard to come up with any other country in Africa with that scale of opportunity. To determine where the need is, one has to look at airlift, economic activity, tourism attractiveness and so on, to determine what is appropriate. I cannot imagine that many, if any, of those cities have zero need for new hotels.

What trends are you currently witnessing or foreseeing in the market?
I see hotels “fighting” back on their restaurant and bar offerings, competing strongly with independent restaurants and bars. Some hotels, such as the Eko and the Lagos Continental, have multiple outlets, and rooftop bars are in vogue.
On the performance side, for the first time in many years the hotels are achieving above-inflation increases in revenues, essential for a profitable and sustainable business.
And on the supply side, I can see a continued dearth of new supply entering the market, due to very high construction costs, the devaluation of the Naira and the difficulty in raising finance.

How will global economic trends impact hospitality demand and investment?
The great unknown now is what impact Trump2 will have on inflation, interest rates, terms of trade, and more. We’ll know pretty soon. Currently, interest rates are on the way down, which eases the debt service burden for Nigeria and other African countries.
If that saving is put into fixed capital formation, particularly infrastructure, then that will increase hotel demand. We’ll wait and see on that one, too.

Hotels or stand-alone restaurants, which is the most attractive hospitality asset class for investment?
They’re two very different asset classes. Hotels are long-term investments, with much more capital required compared to a stand-alone restaurant. And hotels take a while to ramp up the revenue levels in the first couple of years, whilst a restaurant can open to a full house.
On the other side of that, the sale of overnight accommodation is more profitable (fewer operating costs) than meals and drinks. Hotels can last as a business for many years (centuries?), whilst restaurants are more susceptible to changing fashion, and to competition, with fewer barriers to entry.

What are the most significant risks or challenges facing hospitality investors and operators today?
We’re a people business, and hotels globally are suffering from what is known as the “great resignation,” meaning that staff who were laid off during the pandemic three or four years ago did not return to the industry.
According to the American Hotel and Lodging Association, more than three-quarters of surveyed hotels are experiencing a staffing shortage, and 79% say they are still unable to fill open positions. A guess estimate from last year was that the hotel industry had 100,000 unfilled vacancies.
Numbers are less of a problem in Nigeria (with sometimes hundreds of applicants for a single position in a hotel), but the problem is finding skilled staff, and/or with attitudes and personality required to deliver great service.
On the financial side, interest rates are too high for hoteliers needing to source funds for working capital or for renovations, leading to shortfalls in product and service delivery. That is compounded by inflation, with rapidly increasing input costs – food, drinks, transport, energy, you name it – that revenue increases cannot cover. That sometimes means cuts to hike profits, hikes which impact negatively on the guests’ experience, resulting in dissatisfaction and a reduction in repeat guests.
For imported input costs, the inflationary impact is exacerbated by the devaluation of the Naira against the US dollar – anything imported that was priced at NGN1, 000 at the beginning of 2023 will now cost at least N4, 000. Whilst the mantra may be “buy Nigerian”, that’s just not possible when trying to deliver service to an international standard.
And then there’s government intervention in our industry. Hotels are highly visible by design, and are seen as soft targets for taxation, licenses, levies, and charges ad infinitum by all tiers of government; these costs just pile on top of the operating costs I just mentioned which are increasing by leaps and bounds. It’s self-defeating, really – higher costs from government means fewer staff employed, lower profits to tax and so on. Let’s get a better balance to this.

How do alternative accommodations like Airbnb and short-term rentals impact the hospitality landscape?
Well, not much so far. Airbnb and the like are important providers of accommodation, but have yet to take off in Nigeria in a big way (compared to, say, Cape Town). Where I see a massive opportunity, for investors and for guests is the branded extended-stay product.
During the pandemic, the sector performed very well in the USA, and afterwards continues to outperform by some 10 percentage points of occupancy over “normal hotels”. Operating costs are lower, build costs are lower, and therefore investor returns are higher.
For the guest, there’s greater flexibility and freedom for longer stays in an extended-stay hotel than in a “normal” hotel room. Abuja has two branded extended-stay hotels, Lagos has none, although there is a Citadines property under construction in Lekki Phase 1.
Given the high cost of hotel construction, I do see increasing interest in development in the extended-stay sector in years to come.

Stepping out of Nigeria, which regions or markets within Sub-Sahara Africa offer the most promising opportunity for investment?
If you look at our Hotel Chain Development Pipelines in Africa 2024 report, the five top markets for future development are Egypt, Nigeria, Morocco, Ethiopia and Cape Verde, which together account for more than half of the total pipeline in 41 countries.
All but Cape Verde are large countries with multiple cities and resorts for new development; Cape Verde has multiple islands, great airlift and close vicinity to Europe, hence the volume of development activity there (in larger-than average beach resorts).
There are 13 countries in Africa where there are no development deals, such as Libya, Mali, Sudan and the Central African Republic. Nearly all are small countries and/or wracked by conflict and/or toxic politics, but that doesn’t mean there are not opportunities for new hotel development.
At one time, Libya was a real honeypot for investors and the brands, but a civil war put a stop to that and there are currently no new chain hotels planned there, but that could change. Whilst considered wisdom is that investors need stability in order to risk their capital, risk is perceived differently by different people, and some investors, particularly in Africa, see opportunity more than they see challenges. But they do need to be brave!

*Culled: Hospitality Insider

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