How COVID-19 hit Nigeria’s hospitality sector

Photo credit: Hospitality Net
Photo credit: Hospitality Net

By Funmilola Olukomaiya

As the world continues to be rattled with the Novel-coronavirus (COVID-19) outbreak – with key economies and sectors taking the heat, many sectors of the Nigerian economy have been affected and one of the hardest hit is the hospitality industry, due to the global lockdown.

The most affected sectors of the pandemic ate the travel and tourism sectors with banging effects from flights being grounded or hotels closed.

This has resulted in workers having either lost their jobs or on furlough, and with travel restrictions still in place in virtually all countries around the world, and this is likely to be the reality for a long time to come, especially in the wake of the new strain of the coronavirus.

The outbreak and continuous spread of COVID led to rapid shutdowns in cities and states across Nigeria, which greatly affected the tourism industry.

Industries in the tourism sector such as airlines, hotels, entertainment and hospitality industries are faced with declining demand and patronage with travel crashes and cancellations expected to continue.

The increased cancellations of hotels and travel bookings resulted in billions of dollars in revenue loss and hundreds of thousands of job loss in the country.

The findings of a study by Emeka Daniel Oruonye and Ahmed Y.M. of the Taraba State University revealed that COVID-19 is already worsening the unemployment situations in the country, resulting in loss of substantial revenue to the government, increasing incidence of poverty among others.

The International Air Transport Associations (IATA) in March 2020, had projected that the coronavirus will seriously disrupt the travel/tourism industry; unfortunately, this has caused major losses.

The last unemployment report released by the National Bureau of Statistics (NBS) ranked Nigeria 21st among 181 countries with an unemployment rate of about 23.1%.

The country has also been rated as the poverty capital of the world with an estimated 87 million people living on less than $2 a day threshold (CSEA, 2020).

The tourism industry is fast becoming a major source of employment contributing greatly to the GDPs of many countries of the world.

Although Nigeria has not taken advantage of the great potentials in the hospitality industry over the years, the sector is gradually contributing to the country’s GDP and economic development in recent times.

For example, Nigeria recorded a total of 5 million tourists in 2016, ranking 59th in the world in absolute terms with revenue of 1.98 billion USD in the same year, accounting for 0.50 per cent of the gross national product (WorldData Info, ND).

The aviation industry recorded $830bn in revenues in 2019, globally commercial airlines were expected to generate combined revenues of about $872bn the full year 2020. With the increase in the infections, flights grounded, the IATA projected that the virus will cause a loss of about $113 bn.

In Nigeria, COVID-19 triggered a new type of recession that was different from the past triggers of recession.

The 2016 recession in Nigeria was caused by the fall in the price of crude oil, balance of payment deficit, adoption of a floating exchange rate regime, an increase in the pump price of petrol, activities of pipeline vandals, and infrastructure weaknesses.

Tourism is a multifaceted phenomenon which involves movement to and stay in destinations outside the normal place of residence.

It brings in large amounts of income in payment for goods and services available, accounting for an appreciable component of the world’s exports of goods and services.

It also creates significant opportunities for employment in the service sector of the economy associated with tourism.

These service industries include transportation services, such as airlines, cruise ships, and taxicabs; hospitality services such as accommodations, restaurants including hotels and resorts; and entertainment venues, such as amusement parks, casinos, shopping malls, music venues, and theatres.

The impact of COVID-19 on Nigeria’s travel sector as at April saw 3.5m fewer passengers resulting in a revenue loss of $0.76 bn and a risk in the loss of 91,380 jobs and $ 0.65bn contribution to Nigeria’s GDP.

Major impacts of COVID-19 on Nigeria’s hospitality sector

It birthed the postponement of many social and cultural events, games and sporting events, shutting down of institutions and centres of learning and closing of internal and international borders.

Its impact in the airline operations was greatly fely by the Nigerian economy. There are more than 400 aircraft registered in Nigeria and 60% of these are used for commercial operations.

COVID-19 outbreak led the governments of many countries to impose restrictions on non-essential travel to countries affected by the disease, indefinitely suspending tourism travel, work visas and immigrant visas.

Some countries placed a complete travel ban on all forms of inward or outward travel, shutting down all airports in the country. At the height of the coronavirus pandemic, most airplanes flew almost empty due to mass passenger cancellations.

The Nigerian government on the 26th March, 2020 declared the closure of airports and its borders to all forms of movement and transportation.

This left airline operators no option but to cooperate with the Federal government’s directives and they were compelled to suspend their operations in a bid to protect the lives of its staff and reduce the further spread of the disease.

It is believed that the travel restrictions cost the tourism/hospitality industry alone a loss of over $200 billion globally, excluding other loss of revenue for tourism travel.

Travel agencies as key players in the tourism/hospitality sector recorded a decline in ticket sales and reservations for international and continental flights during this period of COVID-19 lockdown.

According to Nairametrics report, agencies experienced 50% drop in ticket sales and reservations for international routes, and with a recent statement from the agencies body, financial incentives are needed to survive the challenges brought upon them by the pandemic.

The National Association of Nigeria Travel Agencies (NANTA) alleged that the country’s Aviation Industry has been projected to lose N160.58 billion and 2.2 million jobs in 2020 as a result of the pandemic.

Also, hotels and hospitality sector as a major revenue earner, with the potential of creating thousands of jobs annually had a fair share of the COVID-19 impact.

Hotels and hospital subsector of the tourism industry have also had their own share of the challenges from the lockdown policy of the government of Nigeria.

With the government’s announcement of “stay-at-home policy” and “social distancing” movement restriction, most restaurant businesses were greatly affected.

This led to rapid shutdowns in cities and states to control the spread of the disease, which threw many restaurants and hotels across the country into sudden shock.

Many hotels have recorded decline in bookings due to the health scare, while restaurants in major towns in the country are now restricted in their services.

Since most restaurants operate with fresh food products, which are difficult to keep in stock as demand fluctuates, they are bound to incur losses.

The economic losses of the pandemic on the hotel and hospitality industry was enormous. The impact will make it extremely difficult for many of the tourism industry’s players to continue paying staff with a sharp drop in sales and income, resulting in job loss.

Infact, many hotels are already closing down because of low patronage and inability to meet up with payment of worker’s salary and electricity bills while many others have already cut down on their workforce, and some slashed workers’ salaries by 50 per cent.

With the lingering effect of the COVID-19 pandemic, especially the new strain which is believed to become the dominant strain, it is feared that the volume of revenue loss may affect the ability of most of the industries and businesses in the hospitality sector to return back to normal operations without appreciable financial support from the government.

What do you think?

This site uses Akismet to reduce spam. Learn how your comment data is processed.