‘Nigerian hospitality industry is still at its infancy’

by | January 23, 2018 12:51 am

Andrew Mclachlan is the senior Vice President, Business Development, Africa and Indian Ocean for Carlson Rezidor Group, owners of Radisson Blu hotels. Mclachlan is quite bullish about Nigerian economy because of the potentials the economy offers. He was in Nigeria recently when his company partnered Avalon Intercontinental Nigeria Limited to open another Radisson Blu Hotel in Ikeja. Mclachlan who spoke to BusinessDay sees Nigeria economy as probably being the most profitable for Carlson Rezidor in Africa because of size of the economy.  Excerpts

May we know why you are in Nigeria this time?

have been coming to Nigeria since 2002 and it is based on the potential economy of Nigeria. I really believe in Nigeria. The country is  our key market from Radisson Blu point of view. There is huge opportunity and huge growth principally because of the size of the economy. There are 36 states and each capital of a state potentially needs to have a hotel, maybe not Radisson Blu but perhaps one of our other brands in Carlson Rezidor Group. We have four brands and they should be operational within Nigeria. Radisson Blu is our heavyweight boxer. It is a brand we bring in to the market first and once we establish Radisson Blu, we bring some other brands. We have three star brand hotel called Park Inn by Radisson in Abeokuta, we have another hotel under development in Apapa. We are negotiating another Park Inn Hotel on Victoria Island. We have another one under construction in Onitsha. We would also like to bring Park Inn by Radisson in Abuja. Today we have two Radisson Blu in Lagos and they would complement each other. We are a nimbler hotel and we can react faster and better.

If you trust so much in Nigerian economy, why haven’t you been more operational in Nigerian economy before now?

We signed our first deal in 2006. It took a little bit longer than we anticipated. But today we have nine hotels – some are opened and some under development in Nigeria. With three opened already and six under development and we have 1,655 rooms in Nigeria today. We anticipate that in the course of the year to add three more properties in Nigeria. The country has the capability to give real scale of growth. It is a tough market, entry is difficult but one needs to understand how to do business in Nigeria as the country is not like any other W/African market.

In your entry process, you are entering into already built hotels, do you have plans to build your hotels?

In our development strategy, we have 50% new build and 50% we take up existing hotels to manage. In Nigeria and most parts of Africa, we take over some of the hotels but for our new built hotels we start from scratch. This is a very unique opportunity for us to step in and take over a brand new hotel. We are ready to add a lot of value to the Avalon Hotel group. Looking forward, we would like to have a combination of some take-over of some existing hotels and build. Why we won’t focus on take-over alone is that in certain parts of the country, it is proper to locate a new build from scratch.

How do you manage and reconcile the culture when you take over management of hotels?

This is not the first time we are taking over an existing hotel that is operated by other hotel company. It is a common thing that happens globally. When contract comes to an end, one brand leaves and another brand steps in. The  focus of a new brand that comes in is to improve the business within the market. We have a great training programme and with mentors. We are going to train them to deliver the Radisson Blu promise.

What is the time-frame for the remaining six hotels expected in Nigeria?

The other six hotels would probably open over the period of next four years.

What is the investment outlay of all these hotels?

Remember we are the owners of the hotels and not the real estates. The real estates are owned by local partners. It is about $400 m for the nine hotels.

What sets Radisson Blu apart from the other competing hotels?

One is service philosophy; it is the training of the staff and design of the hotels. It is also the ease of doing business with us – booking online, checking in to the hotels, how we structure our rates with our corporate clients. We want to make sure that Radisson is the first choice for guests, suppliers and investors.

How would you describe the Nigerian hospitality industry?

The Nigerian hospitality industry is still at its infancy when compared other countries. For instance, other big countries like Egypt and South Africa have very more hotel rooms. Nigeria has 8,500 rooms of international standard less than S/Africa. There is room for growth for Nigeria’s hospitality sector. What has been positive is that we have come into the Nigerian market. At the moment, Nigerian hospitality industry is more of business travel and some domestic leisure. At the moment, most of the hotels are stand-alone hotels but in future we will start seeing hotel apartments becoming a popular part of hotel where businessmen and women can stay for months. In Nigeria, there are other fundamental infrastructure costs which are far higher than other markets. For instance, the costs on energy are very high and this makes cost of running a hotel in Nigeria high.