Africa: Recession and price gaming has made customers more abusive in Nigeria – report says

Recession and price gaming has made customers more abusive in Nigeria – report says
-predicts 7.3% decline in tourism contribution to the GDP, if negative impact on tourism’s downward spiral is not quickly arrested

-2016, there were 61 new hotels with 10,222 rooms added in Nigeria

By Renn Offor

Jumia Travels has released its annual Nigerian Hospitality Report for 2017 which showed that the impact of recession and price gaming has made customers more abusive in Nigeria even as it predicted that the country still has huge E-commerce opportunity for tourism while it highlighted terrorism in the North-East of the country has made many international tourists to tick out the country from their travel list, and also foreseeing a further gloomy 7.3% decline in the sector in 2017.

The report presentation held on 30th January at Four Points by Sheraton Hotel, Victoria Island, Lagos.

The report opened with an overview of the Nigerian Factor, after Mr. Paul Midy, CEO Jumia Travel made a welcome speech in which he expressed the strong belief of Jumia Travels in growth and development of the tourism sector in Nigeria.

He maintained that, “We are determined to support the economy through our platform by attracting both domestic and foreign tourists to discover the country’s new and exciting tourist destinations. The potentials of tourism in the country are yet to be fully developed; to this course we’re committed to use the internet to grow the sector, and change people’s lives”.

Mr. Kushal Dutta, Managing Director Jumia Travel Nigeria, focused his discussion on “Why Nigeria has huge E-commerce opportunity for Tourism” as he presented The Hospitality Outlook for 2017.

He explained that although hospitality accounted for 4.8% of the country’s GDP, the hospitality industry still has more to offer provided the security challenges facing the country can be quenched. “This will attract a lot of foreign investors, and tourists to the country.
“The industry’s contribution to total employment in the country stood at 1.6% in 2016, which is approximately 661,000 jobs. This included employment by hotels, travel agents, airlines, and other passenger transportation services (excluding commuter services). It also included, for example, the activities of the restaurant, and leisure industries directly supported by tourists”.

Mr. Kusher went on to explain that Lagos is the main destination in Nigeria, well-known as a business destination. 2016 witnessed a sharp decline in economic activities due to the fall in oil prices and inflation. Lagos is also the African hub for Music, Cinema (Nollywood) and new technologies.

“Some of the top tourist destinations in the country include Obudu Mountain Resort in Calabar; Oke Idanre Hill in Ondo State; Coconut Beach in Badagry Lagos, Kainji National Lake Park in Niger State, and Falgore Game Reserve in Kano.

“Many tourism events were held in Lagos in 2016, such as the African Travel & Tourism Conference (Akwaaba); and the Nigeria Hotel & Tourism Investment Conference which are at the forefront of attracting international tourists into the country through a convergence of tourism experts from across the continent.

Domestic travel spending grew to NGN 2,688 billion, a 4.9% increase in 2016 over 3.2% recorded in 2015.

In 2016, there were 61 new hotels with 10,222 rooms in total. In the whole of Africa, Lagos, the largest city on the continent, continues to lead the top 10 by number of planned rooms, with over 4,000 planned rooms.

Abuja, the capital of Nigeria, has the second highest number of planned rooms in the African pipeline, and together with Lagos accounts for 32 per cent of the rooms in the top 10. Some of the top 10 brands by number of hotels and rooms expanded include Radisson Blu, Hilton, Sheraton, Ibis, and Four Points by Sheraton.

The Nigerian Factor according to the report saw a GDP Growth in 2016, where Nigeria ranked 1st among African economies, while the tourism sector indirectly accounted for 4.8% of Nigeria’s total GDP 2016.

It also reveals that Internet penetration in the country stands at 52%! 52 % of Nigerians have internet connection while for Tourism and Employment, travel and tourism contributed 1.6% of the total employment.

According to the report, the tourism industry contributed NGN 1. 7bn (US$ 5.5 million) to Nigeria’s GDP ( that is 4.8% of country’s GDP) in 2016. This contribution was a major boost for the economy especially since the country’s GDP shrank 2.24% year-on-year in the third quarter of 2016, following a 2% decline in the previous period, and compared to market expectations of a 2.5% decline.

The report insisted that while lower oil prices continued to hurt the oil sector which slumped for the fourth straight quarter, the non-oil sector was flat after shrinking in the previous two periods.

The report further observed that Nigeria’s economy over the last five years has been driven by growth in agriculture, telecommunications, and services. Crude oil remains Nigeria’s major export accounting for almost 95% of the country’s total exports.

It pegged Nigerian population to have reached 193, 4 Millions in 2016, stating that 1 out of 5 Africans live in Nigeria.

The report critically observed that even though Nigeria might not be the first choice as a tourist destination in Africa, there were fewer international arrivals in 2016, due largely to the ravaging effect of terrorism in the Northern Nigeria.

“This really impacted negatively on the inbound tourism as a lot of international tourists ticked off Nigeria as a tourist destination.

“Despite the threat posed by terrorism, the country still managed to generate NGN 88.2bn (US$ 2.8 millions) from International visitors.

“By 2017, this figure is expected to fall by 7.3% if the security challenges in the country still persist”, the report observed.

Mr. Bruce Prins, a Hospitality Consultant, in his observations maintained that, “Hospitality industry suffered extreme pressure in 2016.”

He made an effort, trying to define or describe the hotel industry in Lagos in 2016 and how the hotel business fare in the past year,

“The industry was under extreme pressure as a result of a reduction in foreign visitors, and local corporate expenditure. The price war between many hotels undermined the hospitality industry’s perceived value, and also created a lot of degradation in so far as the quality on offer. Reduced services, and ill-maintained facilities contributed to the latter due to the price wars.

“The hotels that kept with their product, promise, and standards, as well as having and continued to promote the hotel to the local market, instead of only chasing foreign clientele, fared better than those taking the route of playing the low-price game to attract guests. These guests were simply opportunistic, and disloyal”.

Mr.  Prins also spoke about the profile of his customer today and where they come from, saying, “Our customers are more demanding and aggressive. They want attention 24 hours a day, and are intolerant of what hotels can and are able to offer.

“The supply outweighs the demand and thus customers are exploiting this to the fullest, where possible. Because travelling out of Nigeria or even around Nigeria is now extremely expensive or cumbersome, elite, middle-class, and corporate customers are now looking more locally for quality and suitable accommodation”.

He equally highlighted Top 5 trends in the hospitality business to watch out for in 2017:

1. More recreational facilities and services will be required.
2. Better reservation systems that are 24 hour, and easy to action will be the deal-breaker.
3. Ease or disease of air travel will affect everything.
4. Renovation and maintenance will make a hotel, and the lack thereof will break a hotel.
5. Social media is, and will be even more so the most powerful marketing tool.

Mr. Prins went on to tap on areas of noticeable change in hotel culture and style for business travelers.

“Clients are spoilt for choice, and are easily bored. Hotels have to innovate and adapt their products to ensure they retain customers. In addition, the clients are now more price savvy, so where hotels are abusing rates by charging unreasonable rates for inferior products, the clientele are simply going elsewhere. One noticeable thing is that customers have become more abusive, even malicious in their dealings with hotel personnel”.

The Domestic Overview according to Jumia Travel, Nigeria gave the Average Price in the Most Popular Destinations as the Region Demand Average price: Lagos 58% 78 USD; Abuja 13% 70 USD; Ibadan 6% 45 USD; Port Harcourt 5% 62 USD; Enugu 4.2% 50 USD; Owerri 3.5% 53 USD; Calabar 3% 68 USD and Benin City 2.5% 48 USD. Others cities: 4.8%

Bankole Bernard, President, National Association of Nigeria Travel Agencies (NANTA), in his position maintained that a “Sturdy aviation industry will grow the tourism sector”.

He went on to recommend that, “the fastest route to growing the Nigerian hospitality industry would require a revamping of the aviation sector to provide the necessary perception and easy gateway for tourism. Without a sound aviation industry, the tourism section cannot grow or live up to expectations”.

Mr. Bankole highlighted the top 4 quick fixes for the travel and tourism industry to grow beyond its current state would involve Government endorsement of policies that favor the industry in terms of Forex request from CBN; Aviation fuel supply to ease operations within the industry; Improved infrastructure at airport terminals, and the Privatization of the aviation industry.

Speaking on how NANTA’s contributions impacted the hospitality industry and the main request destinations for Nigerians in Nigeria and outside Nigeria, he explained that NANTA’s position has been on serious advocacy to draw the government’s attention to the aviation industry and help look into the dwindling fortune that would contribute to the GDP of the country.

‘The role of the association is that of a serious pressure group, ensuring the government listens to the yearning of the people and policies that favor the industry for the desired growth are endorsed. An example of such policies is the Aviation Intervention Fund to stabilize and assist domestic carriers to increase their competitiveness in the industry. Some of the popular request destinations include: Calabar, Badagry, Dubai, Zanzibar, Kenya, South Africa.

The report went on to reveal that Nigeria is among the leading countries with the highest smartphone penetration in Africa. In 2016, there were 15.5 million smartphone users in Nigeria.

The success of e-commerce in the country can also be a consequent of the increase in the number of smartphone users, which is forecast to reach 18 million users in 2017.
Internet penetration stood at 52% (97, 210,000) of the country’s population (186,879,760) as at June 2016.

E-commerce is estimated to be worth US $13billion by 2018. However, the country is still lagging behind African countries such as Morocco, Egypt, and Kenya.

Globally, the number of hotel bookings made online stand at 148.3 million while the percentage of same day hotel reservations via smartphone stand at 65%.

Omolara Adagunodo,  Jumia Travel’s Head of Customer Service, Nigeria focused on “How to change customers behavior from offline to online”,  as she explained how much in advance travelers are searching on jumia travel. She revealed that 40% search same Day; 9% Two Days; 6% 2 to 3 Days; 5% 4 days; 3% 5 days; 2% 6 days; 2% 1 week; 11% 1 and 2 weeks; 10% 2 weeks to 1 month; 6% 1 month to 2 months and 6% More than 2 months.
Folorunsho Jimoh, who is Head of Revenue Management Nigeria treaded on New Technologies in Hotel Management Payment options, as he focused on “Using Technological Solutions to Drive Revenue”.

He explained, using personal experience to prove that “hotel managers now look forward to our calls and face to face meetings (both at the hotels and our office) to hear the advice we have for them to make more businesses. The biggest challenge right now is that majority of our hotel managers prefer face-to-face meetings to phone calls/e-mails and having meetings with our hotel partners outside Lagos to strengthen our relationship e.g. Abuja, Port-Harcourt, Owerri etc’.

He outlined the innovations and technologies that Jumia Travel has adopted for seamless revenue management process and how is this improving the hotels automation, saying that “Because of our massive growth in booking volume, it is imperative to provide better experiences to our customers and partners. The extranet (app+web) is one of the easy to use tools designed to achieve this”.

With this, hotel managers can Take full control of their profile online (access to update their rates and availability); Beat competitors (adapt rates to demand and occupancy level ); Analyze data (View statistic of visits and booking conversions made); Read customer’s review early enough; All these can be done at their convenience anywhere in the world, and other technologies adopted is the acquisition of channel management like SiteMinder and RateTiger.

On whether there specific processes his team follow in designing great packages for the customers, on how hotels react to our Black Friday operation, he explained that the process is very simple: provide varieties of packages for the customers to choose from to meet their different needs.

“Apart from this, we have the holiday packages designed for leisure travel and the Special Wednesdays Dream deals (discounts you will never get elsewhere). Hotels reacted positively to our Black Friday, the sales were massive, publicity top-notched and this prompted the extension of some deals by hotel managements beyond the earlier agreed dates”.

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