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    Monday, March 7, 2022

    Globally, there is an Optimistic Projection that Hospitality Industry Will Make a Remarkable Return

    by Kemi Adeoye

    What could have been

    Nigeria was expected to be the fastest-growing hospitality market with a projected 12 percent compound annual increase from 2019 to 2023 according to a PwC projection. In  early  2020  however,  the  COVID-19  pandemic  spread  globally,  and  the  tourism industry was one of the worst-hit.

    Globally,  the  tourism  industry contributes about 10 per cent to  the  global  GDP.  This was  expected  to  rise  in  four  years  with  significant  upward  movement  in  Mauritius, Kenya, Nigeria, and South Africa. In Nigeria, the contribution of travel and tourism to Nigeria’s GDP was 5.1 per cent in 2019. In 2020 however, the upward trajectory slowed down due to the pandemic.

    With the ban on international and even local travel shortly after the outbreak of the viral  infection  in  Nigeria,  non-essential  travels  were  suspended.  Travel  for  work  and holidays were put on hold and the nation as well as the rest of the world was forced to  go  virtual  as  a  method  of  work  and  entertainment.  Due  to  this,  hotels,  tourist attractions, and air transportation were some of the industries hinged on tourism that were badly affected.

    Job loss in the travel and tourism industry

    The World Travel & Tourism Council estimates that 1 in 10 workers in the world work in the hospitality industry. This translates to 1 in 10 workers losing their jobs as a result of the industry being grounded because of the pandemic.

    From March 2020 to around March 2021, many countries announced a ban on  international travel and closure of restaurants and hotels while also limiting gatherings. All these measures were put in place  to  reduce  the  spread of the  virus. However,  they also  affected employment in the travel and hospitality sector.

    The  Regional  Director  of  the  World  Travel  and  Tourism  Council,  Andrew  Brown revealed that  “$4.5tn was lost by the tourism and hospitality sectors as a result of the COVID-19 pandemic worldwide and over 770,000 jobs were lost in the sector in Nigeria alone.”

    This figure also closely follows the estimation that 1 in 10 Nigerians lost his/her job in the  tourism  industry  which  also  affected  those  whose  goods  or  services  are  either directly or indirectly connected to it.

    For  example,  the  production  of  in-flight  magazines  in  Nigeria  took  a  hit  when  the tourism  industry  suffered  as  a  result  of  the  pandemic.  While  magazine  production would  be  appropriately  considered  a  media  and  communication  sector,  its  target audience is tied to the travel industry which ultimately meant that those who worked in the editorial, photography, copywriting, news gathering, typesetting, printing, and distribution  department  of  the  magazine  lost  their  jobs  during  the  aforementioned period.

    Companies  that  also  provide  cleaning  services,  entertainment  and  advertising  for travel and tourism companies also had to lay off their workers, reduce their pay or in some cases, keep them officially employed while not paying them during the heat of the COVID-19 pandemic.

    Beyond the examples mentioned above, there are more sectors and industries whose existence is reliant on providing goods and services to the tourism sector or are part of the supply chain that need the industry to thrive for them to benefit. The people in these sectors belong to the so-called ‘other 9’ whose industries are not considered a part of travel and tourism but essentially dependent on the sustained operation of the tourism sector for survivability.

    What does the future hold?

    As   the   world  is   trying   to   adapt   to   the   changes   brought  by   the   pandemic,   the hospitality  industry  is  also  making  a  steady  albeit  slow  return.  Research  by  Jenny Southan, a travel editor and founder of Globetrender, projected that “as people think more  carefully  about  the  way  they  travel,  they  will  seek  out  hotels  and  travel companies  that  are  doing  everything  they  can  to  minimise  their  impact  on  the planet.

    We can also expect accreditation to gain prominence, as consumers look for reassurance from legitimate “eco-tourism” certifications (Visitors) will want to book  trips  that  leave  them  feeling  better  than  before  when  they  return  home. Wellness tourism will be increasingly popular.”

    Globally,  there  is  an  optimistic  projection  that  the  hospitality  industry  will  make  a remarkable return. However, only the prepared can make a quick return, and to do so requires   understanding   the   uniquely   changing   needs   of   customers   and   clients. Nigeria  needs  to  take  a  proactive  approach  in  order  to  be  at  par  with  global  best practises and not wait for others to take advantage of the relatively small market that is just making a return.

    A Harvard   Business   Review   article   referenced   partnerships   between   or   among companies as a means for providing shortcuts for companies racing to improve their production  efficiency  and  quality  control.  This  symbiotic  relationship  provides  an essential   opportunity   for   rapid   growth   in   a   period   where   quick   recovery   and adaptation to change is necessary.

    According  to  Deloitte, “In  an  environment  of  dramatically  lower  revenues,  high fixed  costs,  less  than  optimal  asset  returns,  and  the  need  to  conserve  capital, hospitality  organisations  will  need  to  determine  which  areas  to  prioritise  and invest   in.  

    They   will  need   to  find   the   right   balance  between   investment   and conservation,  one  that  achieves  the  highest  ROI  in  the  near  to  medium  term. Some  of  these  decisions  will  endure;  others  may  not.  But  the decisions  made  in the  months  to  come  will  have  a  lasting  impact  on  the  operating  models  of  the hospitality sector for years to come.”

    This  level  of  preparedness  is  evident  in  the  way  Radisson  Blu  Anchorage  Hotel,  a respected   hospitality   brand,   and   part   of   Nigeria’s   leading   investment   holding company,  Honeywell  Group  Limited  (HGL),  is  fostering  an  alliance  with  the  Bank  of Industry to provide a basis for the recovery of the hospitality industry in Nigeria.

    This partnership is hinged on mutual respect nurtured by the positive track record of Honeywell  group  over  the  years.  Our  impressive  performance  before  the  pandemic coupled with a sustained positive service delivery during the pandemic shows a clear path of contributing toward the growth of Nigeria’s economy.

    Nigeria needs more of these important partnerships in the hospitality sector to give it a much-needed boost.

    Our relationship with the BOI has been a beneficial relationship and the Bank of Industry has proven to be a  valuable business partner. The bank  has supported us in building our brand as a foremost hospitality business.”

    With  this  sort  of  institutional  support  long  term,  the  projected  growth  in  Nigeria’s tourism industry which faltered due to the pandemic, can recover, and possibly reach the expected height.

    According to Deloitte, “the COVID-19 pandemic will eventually fade. The economy will  recover,  and  the  hospitality  sector—from  restaurants  to  hotels,  casinos  to sports—will  regain  its  footing  and  look  forward  with  confidence  to  a  successful, thriving  future.  Now  is  the  time  for  companies  to  act,  adapt  to  the  new  normal, position themselves for nimbleness, and thrive in the years ahead.”

    Article was written by Kemi Adeoye, Chief Financial Officer at Honeywell Group Limited

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