CHAPTER ONE

1.0 INTRODUCTION

1.1 BACKGROUND OF THE STUDY

Hospitality growth in Nigeria have become a strand part of many economies of many countries of the world, serving as a backbone upon which service sectors thrive with a backward and forward interconnectivity; wherewith different counties of the world interrelate along same tide (Ayeni and Ebohon, 2012). Wherewith the benefits of hospitality growth are a matter of controversy, it cannot be undermine that hospitality growth provides higher returns on invested capitals; effects to increase agriculture production, and employment; generates foreign exchange, government revenue; finance for infrastructure development, and generally increases citizens welfare, helps capitals flights esp. when associated with overseas trips for holiday and proper overall economic growth (Bankole, 2002:77). The term hospitality growth has been defined differently and some authors choose to define the term with somewhat similarities. It is serious and yet difficult for analysts in the hospitality growth to come to a compromise with regards to a universal definition of hospitality growth. Again, the vague nature of the growth makes it a herculean task in evaluating the investigation into the rate of hospitality growth on the economy when compared to other sectors of the economy (Lickorish and Jenkins, 1999: 1-2). The hospitality sub-sector ensured the provision of services for individuals, family, group of people, organizations etc., that were away from their homes for a particular period. However, it must be noted that the patterns of rendering services either by restaurants or hospitalities often vary in the context of specific needs and desires of the guests regardless of the operators’ rendering activities and services. Hospitality was among the oldest of the human professions, which entailed ensuring a guest, client etc., to feel welcome and comfortable. It was further affirmed that it had been in practice before many professions. Well, such statement is debatable. Hospitality goes beyond hospitalities and restaurants, but could also mean other legalized institutions that specialize in either providing shelter or food, or better still, both services to people as long as it is away from their respective homes. Nigeria have benefited immensely as a result of mutual understanding between the hospitality growth and the financial sector (i.e. banks) to increase revenue to central purse of the governments via their collaborations for economic development. It was apparent that food and shelter remained significant to the livelihood of people and sustenance to the larger society to reduce poverty. For instance, Banks during seminars and conferences make use of hospitalities, restaurants, resorts etc., during break time, food and drinks were often served by food department of the hospitalities that is, either directly or indirectly there were more to an existing association between the sectors of interest ( hospitality), which is, funds availability. Despite the increasing trends of globalization, the investigation into the rate of hospitality growth in Nigeria particularly in Ebonyi state, has been worrisome even before global financial crunch in the first quarter of 2008 the recent continuous decline in the global crude oil prices; thereby affecting the liquidity performance of the economy, and becoming difficult to channel funds to the hospitality growth, The present recession period being experienced by Nigerian economy has affected all sectors leading to the reduction of the expected profitability trends of hospitality sectors and drastically reducing number of guests visiting the hospitalities and customers. To have considered some of the functions of hospitality which include; to accumulate surplus funds and make it available to deficit sectors of the economy, thereby making profits via strong lending and borrowing patterns. Therefore, the smaller the size of the financial institutions, the smaller is the returns and expenditure vice versa. Severally, were always directed to ensure a stable capital in order to absorb operational exposures or unexpected shocks, to achieve profit and consequently minimize risks and losses so as to achieve national economic growth. However, with the help of provision of finance/funds in Nigeria (financial intermediation roles) in ebonyi state, a simple hospitality business could become a conglomerate where it could specialize in the provision of food service operations in different areas such as recreation centers, sports stadiums, primary and secondary schools (e.g. free meal for primary school pupils by federal government), university campuses, either individual or group home services, convention centers etc., with liberality and good will.

1.2   Statement of Problems

Hospitality account for a large proportion of individual (quest in this country and are faced with numerous problem. These problems under the growth and development of hospitality in Nigeria. Thereby limiting their potential contributions to the growth of nigeria economy.  However, the hospitality industries have many roles the play in the economic growth of less development country like Nigeria  of course they remain important in the  economy’s the problems of hospitality growth are lack of fund  by the proprietors and the difficulty the encounter in raising funds. Due to limited capital at their disposal and high interest rate f banks, they find it less attractive going to the banks for loan the level of education of most hospitality proprietors implses difficulty in managerial in capacity many even go hospitality business without easy training in the area lack of technology and operation problems confronting hospitality growth makes it difficult for them to grow:

  1. The researcher should take the problems facing investigation into the rate of hospitality growth in Nigeria, in the area of maintaining good management.
  2. How can hospitality are encouraged to improve their activities in Nigeria
  3. To investigate in what ways Nigeria could overcome the obstacles of political and economic isolation, institutional governance and personalized political structures in relation to its investigation into the rate of ospitality growth.

A good management of Nigerian hospitalities can enormously result in the improved rate of hospitality growth in nigeria.

Objective of the study

The main objective is to examine the investigation into the rate of hospitality growth in Nigeria: issues and challenges. The specific objectives include;

  • To determine the contribution of banking sector to the growth of hospitality in Nigeria.
  • To identify the challenges facing the investigation into the rate of hospitality growth in Nigeria.
  • To examine the challenges facing the hospitality growth Nigeria.
  • To determine the contemporary issues in hospitality growth in Nigeria.

Research Question

The under listed questions required answers in the course of the study;

  • Can the banking sector contribute to the development of hospitality growth in Nigeria?
  • What are the challenges faced by hospitality growth in Nigeria?
  • What are the challenges faced by hospitality growth in Nigeria
  • What are the contemporary issues in the hospitality growth?

CHAPTER TWO

2.0 LITERATURE REVIEW

Argued that the backward movement of capital to fund development in hospitality growth remained a macro-economic problem due to the economic crisis in 2008. Since that financial year, the cost of funds have remained at a very high rate. The high cost of employee turnover was often related to recruitment and selection and training. The loss of productivity served as a determining strategy to investigate employee’s annual remuneration, depending on the employee’s productivity. Claimed that organizations were always unwilling to retain employees for the entire working lives, particularly due to ageing. A very large number of people did not always have sufficient time to prepare delicious and elaborate food at homes. Therefore, many people conveniently eat more food away from home or purchase prepared food to eat at home. claimed in the work, ‘harnessing tourism potentials for sustainable development: case of Owu water falls in Nigeria’ that tourism was a catalyst for national development, in terms of creating employment, ensuring increase in exchange earnings etc., added that to effectively achieve the development of tourism, infrastructural issues (good road network, power etc.) must be thoroughly examined and provided by government, considering the use of environmental resources and the maintenance of essential ecological processes to protect the nourished natural heritage.

Conversely argued that equilibrium in the market for saving would occur at positive interest rate which ensured an increase in supply of domestic and foreign savings, assuming such supply was interest elastic to guarantee some reasonable level of private sector investments. Therefore, it implied that elimination of distortions in the market for financial savings would be expected to yield a vital profit in terms of achievement of a higher rate of fixed capital formation and growth of output that was hitherto impracticable. in the research work, ‘introduction to hospitality’ explained that students were capable of coming-up with ideas that could proffer solutions to challenges/problems being encountered in the hospitality growth and make decisions to improve management performance via acquired skills. Further added that students would be able to know existing associations between a guest and a host, which could either be for a profit or non-profit. It must be noted that to meet profit purpose helped to increase the earnings of the economic agents (i.e. government, firms, and households). In the work, ‘the influence of the economy on hospitality growth in Nigeria’ explained that instability in the Nigerian economy has remained major constraint to the development of hospitality growth. This may be traced to the global economic melt-down and financial crunch in early quarter of 2008. Further claimed that devaluation of local naira may also be termed as restrictions to the development of hospitality sub-sector. With the temporary economic downturn as a result of restricted credit expansion/ cash crunch, the effect may lead to low effective demand for goods and services and other recessionary factors. However, the magnitude of growth level in the number of banks competing for a limited customer-base in an environment of shrinking margins may force the banking sector to greater commitment in terms of efficiency and customer satisfaction that may invariably serve as a key for economic survival and success [6, 20].

Hospitality Growth

Hospitality has remained a profession without a specific definition. Hospitality is way of providing food to either guest or stranger away from home. Hospitality is defined as a principles and practices of proving food, and/or drinks and/or accommodation, to visitors, strangers, guests etc., away from home. However, in a contemporary context, hospitality simply mean the existing relationship just between a guest and a host. Hospitality is regarded as a doctrine of making provision in terms of food, drinks and shelter, even both to strangers and guests etc., away from home at a profit. Opined that hospitality could be referred to being kind and generous in welcoming and providing the basic needs and wants of guests, relations, strangers etc., in order to satisfy with drinks, food and above all accommodations away from home with liberality and good will. Therefore, hospitality is simply companies or corporate organizations that specialize in providing food and/or drink and/or accommodation to all kinds of people that are away from home with liberality and good will. Therefore with food and shelter, hospitality has successfully met the two basic needs of human society. It has further shown that the roles of hospitality cannot be over emphasized due to its immeasurable importance to human existence, sustenance and survival. The hospitality sector has since been regarded as one of the world’s largest industries, attracting over five hundred (500) million people (i.e., tourists, guests, strangers, hosts etc.), and also helped to generate at most 8 percent of global gross domestic product (GDP). Hospitality entailed the provision of services (food and drinks) to places such as motels, tourist camps, holiday centres, resorts, bars, cafeterias, snack bars, pubs, nightclubs etc., away from home with special financial assistance from banking institutions

Challenges of Hospitality Growth and Banking Sector

Hospitality growth was one of the fastest growing sector indicating averagely one-quarter of the global services, but with several challenges. Not all hospitality businesses were for profit-making. The hospitality market was characterized as a face-to-face contact with the guest. The challenges include; Economic Recession: Nigerian economy has witnessed high exchange rate – US$1 = #314, interest rate (MPR) -14%, and bank assets controls resulting in low direct investment. Credit aggregates moved rather slowly, which allowed continuous pressure on the banking sub – sector and the economy at large. The effect of the recession has led to the widespread decline in the values of the asset and with stakeholders suffered large losses, (i.e. cash crunch has discouraged visitors, strangers and guests to visit restaurants, hotels, casinos, etc., thereby affecting the aggregate revenue of the hospitality organizations. The effects of recession has led to the sharp decline in guests flows and spending, restrictions in length of staying in hotels, and serious limitations; thereby directly affecting the national economic development of the country. Decrease in hotel financing: Financing was perhaps one of the oldest and the most important functions through its intermediation role was able to channel the surplus deposits of its customers as credit to the needy customers in order to earn a return. The success or failure of a Organization depends on, among other things, its ability to grant recoverable credit facilities and make reasonable margins from them. Hospitality was highly diversified in terms of different businesses (i.e. restaurants, bars, cafeterias, snack bars, pubs, nightclubs) that operate under its auspices. The conditions (e.g. high interest rate charge etc.) attached to lending by Nigerian banks discourage investors. The low purchasing power and high cost of financing hotels and restaurant business have retarded the improvement expected in the sector such as high inflation rate at 17.1% and consumer price index at 17.6%. The overall cost of maintenance, payment of staff salary and wages vis -a-vis low customers’ patronage often discouraged major stakeholders in the hospitality growth. The institution may decline channeling funds to growth faced with multiple challenges due to risk and uncertainty that was prevailed in the sector.

Lack of Power Supply: For several years, hospitality has remained a fulcrum to achieve income generation and to ensure poverty alleviation via mobilization and utilization of resources. The low in power supply has further reduced overall turnover of the sectors. Nigeria as a nation is opportune to effectively maximize opportunities to improve lives of interested people participating in hospitality growth. The ability to make the banking sector and hospitality growth viable has been hampered by the incessant power outage. This has forced hospitality industries to relocate to other countries, where the economies remain uncertain of the future. Due to power problem, provision of meals and refreshments within the framework of institutional catering. Hospitality was an innovative strategy for the development of an economy. Hotel business outlook in Nigeria is gradually becoming strong and improving. The innovation in the hospitality growth served as the key structural feature by way of discovering new sources or alternative means of financing the lucrative business. The alternative sources of funds from finance houses, discount houses, bank of growth (BOI) etc., will motivate economic agents (i.e. households, firms and governments) to engage in various socio-economic and business activities in order to achieve national economic growth and development. Despite the temporal recessive trends of the nation’s economy, people still patronize hotels, bars, casinos, restaurants, resorts as part of leisure after period of hard work and busy schedules either during holiday or non-holiday. This buttresses the facts that hospitality growth plays significant roles of providing relaxation, comfort ability away from home as well as generating marginal income and revenue for individuals, companies and government -regulator at large. Hospitality has improved enormously in the area of employment generation. The unemployment rate is at 13.1% For instance, the high demand and request of food at a price away from home may require different locations for it to be purchased. The increase demand for food away from home will require its availability in terms of size of the food service growth, which attracts high number of employees; hence, this fact could also be applicable and realizable in hotel facilities, casinos, and resorts etc., thereby promoting growth in the economy.

Large Buying Opportunity: Many individual and corporate organizations in hospitality business always endeavour and struggle to survive from the ‘claws’ of economic downturn, despite the unfriendly environment and cash crunch challenges, but hospitality growth has remained resilient. Due to the bearish trends experienced in the stock market, investors have focused more on a lucrative sector – hospitality growth; channeled more funds to hotels, restaurants etc., with more revenue – US$23 billion generated to sustain the growth . Globally, Middle East and millions of investors from Asia were seriously going after the American market. While American investors were pursuing the Europe opportunities gateway for value investments in order to rapidly escape the already -heated market. The Middle-East investors are searching for potential equity opportunities in Nigeria

Economy to benefit from hospitality industry

The Nigerian hospitality industry is expected to contribute massively to Nigeria’s economic growth within the year, a report has said. According to research conducted by Lagos-based Hospitality Group, operators within the sector are also confronted by multiple taxes and other levies charged by state governments. The report said the upbeat in the sector comes after more than three years of depressed performance. The Hospitality Group interviewed hotel general managers working across Nigeria, and found that no fewer than 83 per cent are optimistic about their hotel’s performance in 2018, a strong bounce-back from 2017, due to renewed confidence in the Nigerian business environment.  Although the survey revealed that the business environment is still challenging, yet the expectations are high. Managing Director of the W Hospitality Group, Trevor Ward, said the feedback from hotel managers is encouraging.  “The hospitality industry is a good indication of the performance of the economy as a whole.  Stronger demand for hotel services is a good marker of increased investment and of economic growth. The problems we experienced of security issues, the oil price crash, and the recent recession are, we hope, behind us”. A negative finding from the survey is that fully 50 per cent of hotel executives complain about multiple taxes and other levies charged by State governments, on an industry which is seen as a cash cow to fill governments’ coffers.  “This is an increasing issue for the hoteliers,” Ward said. “Hotels already incur high operating costs, exacerbated by the depreciation of the Naira, and these ever-increasing government charges are an unfair and threatening burden, especially when we provide so many job opportunities, especially for young people”.

Hotel development in Nigeria

There’s a new kid on the block in Lagos!  The George, a 62-room boutique hotel, opened in June, and is managed by the Mantis Collection.  It’s a stylish young thing, and was opened by the new Governor of Lagos State, Mr. AkinwunmiAmbode, in early July, who said “This is a happy occasion because it has reaffirmed the status of Lagos State as the first choice destination of investment”.

And indeed it is, if the hotel development pipeline in Nigeria’s commercial capital is anything to go by.  Data compiled earlier this year ranked Lagos as the Number 1 city for new chain hotel development, with over 3,500 rooms in 18 hotels, ranging from the massive 350-room Centro by Rotana to the 76-room Mantis Ikeja – yes, another Mantis(and I hear that they are looking at a possible third property in the city).

Lagos hotels have had it pretty tough the last 12 months.  First there was the travel warning issued by the US Embassy, warning of potential attacks on hotels, specifically naming the two Sheraton properties.  Then there was the tragedy of Ebola, the oil price crash, the devaluation of the Naira, the uncertainty over and delay of the February elections – one thing after another, and all outside of the industry’s control.  So for hotel managers and owners, it is a welcome fact that there is no further supply entering the market of any consequence this year – they just don’t need any more rooms just now, thanks. Next year could see the opening of two new brands, at least new to West Africa, and that’s the Ramada Plaza in Lekki, and the African Pride in Ikeja.  There’s a rumour that the latter might be launched as a Renaissance (another Marriott brand), but I wonder what the existing hotel of that name will say to that!  Accor opened an Ibis-branded hotel right next door to one called Ibis Royale, and a right royal dispute ensued, with neither one budging.  Watch this space. Marriott will be making further waves in 2017 and 2018, with two more properties opening, the 251-room Marriott in Ikeja (that’ll be their 5th hotel in northern Lagos!) and the Marriott Victoria Island, their 6th in the city as a whole.  Funny really, because only a couple of years, Marriott had nothing in sub-Saharan Africa at all, yet in two or three years’ time they could be dominating the scene here in Lagos, partly riding on the back of Protea, which they purchased last year, and partly because they are finally, after years of trying, gaining traction in their own right. What else?  Hilton, Le Meridien, Hyatt, Four Points, Fairmont and Best Western all have signed deals for new hotels under their brands opening – well, opening one day.  We’re still not very good in this town at opening hotels on time, with delays measure sometimes in years.  Talking of which, the Radisson Blu remains closed since January.  Some say for renovations, some because of labour problems, but whichever is the case, it seems ironic that a hotel which took so long to build (7+ years) has had to close only a short time after opening! Elsewhere in Nigeria, the capital Abuja has been the focus of much investigative and planning activity, but there are still only two internationally-branded hotels und construction, the 126-apartments Fraser Suites (a long-stay brand) and the 219-room Hilton Garden Inn, the first hotel at the airport, reflecting the growth in the number of domestic and international flights there. And in Port Harcourt, Nigeria’s oil capital, Radisson Blu are on site with a 200-room hotel, and Hilton is due to start constructing their 270-room property, with opening slated for 2018. Elsewhere in Nigeria, Starwood’s Four Points brand will open shortly in Ikot Ekpene, an oil city in the east of the country, and the former Gateway Hotel in Abeokuta, in the south west, is in the final stages of a transformation into a Park Inn by Radisson. Onitsha, in Anambra State, just across the famous bridge from Asaba, will also welcome a Park Inn next year. And whilst in the region, Asaba, the capital of Delta State will see the opening of the Best Western Plus hotel in August, with another Best Western in Warri, also in Delta State, later in the year.