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Stakeholders decry harsh economic impacts on hospitality business


A view of Sheraton Hotels and Towers Abuja

When the Capital Hotels Plc, owners of Sheraton Hotels and Towers, Abuja, recently held their Annual General Meeting, shareholders were no doubt, relatively excited with the management over payment of dividend. Although the dividend declared was not very impressive, they nevertheless, commended the management for its ability to survive the harsh economic reality confronting the industry and the nation in general.    
This was in view of the fact that for two consecutive years, the profits were ploughed back into the refurbishment of the Abuja hotel. Then, looking at the business environment as it generally affects the hospitality industry nationwide, the Executive Director, Capital Hotels Plc, Mr. Robert Itawa, decried the stiff financial challenge confronting the industry operators.He noted that funding of capital project under the double-digit bank interest rate has largely affected the hospitality business.
He said: “The key issue is that the business in Nigeria today requires funding. Most of the assets need refurbishment and the capital market doesn’t seem deep enough for long time investments.
“But if you look at investment in hospitality, these are long term investments and take a long time to recover and with double digits interest rate, you cannot fund a 10 to 20-year programme with that type of interest.“So, equity market is very weak right now and as such, I must say that we are having serious challenges depending on internally generated revenue to drive development. That means we are slower in trying to refurbish our assets that we would have wished to be new.”
In view of the economic potentials of tourism and hospitality industry, the M.D expressed the need for synergy between industry operators and government, especially on the issue of funding.
According to him, government’s assistance in addressing key challenges in tourism and hospitality industry will go a long way in improving revenue generation for the country beyond oil income.  “So, there is need to sort out the issue of capital for such projects because if we can receive about five million visitors in a year, each spending about  $3,000, that is almost what we get from oil revenue”, he said.
For the M.D, the ideal tourism business remains retail tourism.  “This is where somebody pay for his ticket online, gets to the airport without know anybody, expects that he will pick a taxi from the airport to the hotel that he has booked and from the hotel, arrange on his own, the site to visit.
“You know that we have beautiful weather that is warm and beautiful but there are people who live under a very cold weather and want to go out to places like Nigeria. This is coupled with the fact that we have natural attractions”, he said.Other stakeholders in the industry also expressed concerned over dwindling income occasioned by the economic reality of the time.
The National, Coordinator, Choice Shareholders Association, Prince Wale Oyenuga, therefore applauded the company for declaring dividend after two years of expectations.“We are happy with the company. In spite of the financial situation we experience in the country and the renovation taking place in the hotel, which has reduced income, they are still able to pay dividend. “Although it is not much but we are happy because we have round and found out that they are really working,” Oyenuga stated.

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