HOSPITALITY

Business traveler lodging and event hosting have always been major growth centres for operators in the Nigerian tourism sector. In the past few years, Abuja, the federal capital territory, has experienced the fastest and highest growth as the demand for short stay lodging, meeting venues and convention centres has been driven by its position as the headquarters of ministries, parastatals, government agencies, major political parties, embassies, international non-governmental organizations and international organization country offices.

Research published by Accenture and the World Travel and Tourism Council (WTTC) show that the Nigerian Travel and Tourism sector will grow by 4.3% over the next decade, even as capital investment in the sector remains at 1.7% during this period, creating an excess of demand over supply.

The decision to enter the sector was based on the identification of certain attractive characteristics of business tourism which include the following:

• It is at the high quality, high-yield end of the tourism spectrum
• It is year-round
• It is resilient, being much less affected by economic downturns, weather or expatriate anxiety like hostage taking or crime since security is high in Abuja
• It stimulates future inward investment as business people see the attractions of a destination while traveling on business or to attend a conference, exhibition or incentive, and then return to establish business operations there.
• It is sustainable, offering higher added value with fewer negative environmental impacts than mass leisure tourism

To attract and handle this quality and level of visitors’ traffic, the preferred location for such visitors must meet certain standards. Therefore, when TransCorp chose to enter this sector, the choice of property and partners was primarily driven by the search for a solution to meet the expectations of visitors in this category.

TransCorp had two options:

Either :
Build a 5-star hotel from ground up and search for a partner with the cachet and experience to bring gold-plated value to it;

Or:
Buy majority equity an existing major hotel and then provide capital to upgrade its services and facilities.

Each of the above had its attractions.  The challenges of building a hotel from the ground up were the amount of time and resources required to do so, in addition to the risks involved in all major construction projects. Moreover, TransCorp sought to take advantage of the current boom in the sector.  

The second option was an acquisition. There are four hotels in Abuja run by international hotel groups: the Abuja Sheraton, which is owned by the Ikeja Hotels Group, the Abuja International Hotel run by Le Meridien, the French hotel group, and the NICON Hilton, the leading hotel in Nigeria, which had a successful Hilton management in place. If TransCorp chose to follow the much quicker acquisition route, a willing seller first had to be found from among this group. The federal government’s privatization program offered such an opportunity.

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