Our Views

1. Political & Economic Context

Nigeria’s political and economic climate between 2019 and 2024 has been mixed, with implications for the hospitality sector. Real GDP growth was modest pre-pandemic (~2.2% in 2019) but turned negative in 2020 due to COVID-19 and low oil prices​. The economy rebounded with 3.4% growth in 2021 and 3.3% in 2022, before slowing to about 2.9% in 2023 amid high inflation​. Inflation surged from 11% in 2019 to 18.8% in 2022, reaching 24.5% in 2023​. This eroded consumer purchasing power and raised operating costs for hotels (e.g. food, utilities). Despite these challenges, Nigeria remained one of Africa’s largest economies and attracted investor interest, including in hospitality, due to its large population and status as a business hub​.

Politically, the period saw a national election in 2019 (continuation of President Buhari’s administration) and another in 2023 (transfer of power to President Tinubu). Political stability has generally persisted, though security concerns (insurgency in the northeast, localized violence) posed headwinds to tourism. The government has shown commitment to tourism development through policy measures. For example, visa facilitation has improved – Nigeria introduced a Visa-on-Arrival system and in 2024 expanded visa-free entry to 17 African countries (ECOWAS and others) to boost regional travel​. Tourism promotion and infrastructure have also been on the agenda, though execution remains gradual. Overall, the macro environment offered opportunities for hotel growth (rising urbanization, a growing middle class, increasing business travel) alongside risks like currency devaluation, high inflation, and security issues that stakeholders must navigate​.

2. Key Destinations for Hotel Investment

Hotel development in Nigeria is concentrated in major commercial and administrative centers, led by Lagos and Abuja. Lagos, the nation’s economic nerve center and largest city, attracts the bulk of upscale hotels and international brands. It is a global business hub and home to Nigeria’s busiest international airport, seaport, and numerous corporations, driving consistent business travel. Leisure demand in Lagos is comparatively limited but growing, centered on its beaches, cultural festivals, and nightlife. The city’s Victoria Island/Ikoyi district and Ikeja (near the airport) are hotspots for new hotels due to corporate demand and infrastructure development. Abuja, the capital, is the second key market. As the seat of government and foreign embassies, Abuja sees steady demand from government functions, conferences, and diplomats. It hosts several top-tier hotels (e.g. Transcorp Hilton) catering to official delegations and business travelers.

Outside Lagos and Abuja, other regions drawing hotel investments include:

• Port Harcourt (Rivers State) – The center of Nigeria’s oil and gas industry, which generates significant business travel. A number of midscale and upscale hotels serve the corporate clients in this Niger Delta city. For instance, international brands like Novotel and Swiss International operate there, and new projects have been announced to tap into oil-related demand.
• Kano – A commercial hub in the north with an international airport. Kano’s historical significance and trade (agriculture and textiles) attract domestic business travelers and some regional visitors. Hotels in Kano (and Kaduna) cater to northern Nigeria’s business and governmental activities, though security can be a concern.
• Tourism Hubs (Calabar, Lagos resort axis, etc.) – Leisure tourism in Nigeria remains underdeveloped, but certain destinations see investment for their tourism potential. Calabar (Cross River State) is known for the annual carnival and ecotourism (national parks, Obudu Mountain Resort), spurring a few upscale hotels and resorts. In Lagos State, areas like Lekki and Epe have seen resort and conference center developments, aiming to attract domestic leisure and retreats. Additionally, cities like Enugu, Ibadan, and Benin City – regional capitals with growing economies – have begun to see branded budget and mid-range hotels (often franchises or local chains) to serve domestic travelers.

Overall, Lagos and Abuja dominate the organized hotel market, accounting for a large share of room revenue and pipeline projects. These cities’ strong MICE (Meetings, Incentives, Conferences, Exhibitions) demand and year-round corporate travel make them prime targets​. However, hotel investors are increasingly eyeing secondary cities to tap unmet demand from Nigeria’s sizable domestic travel market.

3. Tourism Demand Analysis

Air Traffic Trends: Nigeria’s air travel experienced a sharp downturn in 2020 followed by a recovery through 2024. Passenger volumes at major airports illustrate this trend. For example, Murtala Muhammed International Airport (Lagos) handled about 7.5 million passengers in 2019, which dropped 45% to 4.11 million in 2020 amid pandemic restrictions​. Traffic rebounded to 5.69 million in 2021 and 6.53 million in 2022 as flights resumed​, indicating a steady climb back toward pre-pandemic levels. Nnamdi Azikiwe International Airport (Abuja) saw similar patterns; it served roughly 5.4 million passengers in 2019 but only 3.38 million in 2020 due to lockdowns​

By 2021, Abuja’s passenger numbers began recovering alongside the restoration of domestic flights. Nationwide, total air passenger traffic fell by 46% in 2020 (from 17.76 million in 2019 down to 9.43 million in 2020)​, reflecting the pandemic’s severe impact. Domestic travel resumed faster than international, and by 2022/23 many airlines added capacity as demand surged with economic reopening.

Visitor Breakdown (Domestic vs. International)

Nigeria’s hospitality market is heavily driven by domestic travel. In 2019, about 75% of air passengers in Nigeria were domestic travelers, with only ~25% being international arrivals​. This trend underlines that Nigerians traveling for business, family, or government purposes form the backbone of hotel demand. Even within the tourism sector, many “tourists” are actually Nigerian nationals or residents moving within the country for leisure (e.g. holidaymakers to hometowns or events). International tourist arrivals to Nigeria, while significant in absolute terms, are relatively low compared to the country’s size. In 2019, Nigeria recorded roughly 2.0 million international tourist arrivals​ (overnight visitors from abroad). With the onset of COVID-19, this figure collapsed to just about 500,000 in 2020 (–78% year-on-year)​ and remained around 518,000 in 2021​ due to ongoing travel restrictions. As borders reopened, 2022 saw a strong recovery, with an estimated 6.1 million international arrivals​ (approaching or even exceeding pre-2017 highs under broader counting methods). Notably, this rebound suggests pent-up demand and possibly improved counting of regional day-visitors. Despite growth in foreign arrivals, domestic tourists continued to outnumber foreigners in hotels throughout 2022–2023. Industry surveys indicate that business travelers from within Nigeria account for up to 77% of hotel demand in Lagos​, underscoring the dominant role of local corporate/government travel in occupancy.

Top Source Markets (International)

Nigeria’s international visitors come primarily from neighboring African countries and a few key overseas markets. Regional West African travelers make up the largest share – in 2022, Niger and Benin Republic together contributed roughly 23% of Nigeria’s foreign arrivals (16% and 7%, respectively)​. This is attributed to the ease of entry for ECOWAS citizens (visa-free movement) and cross-border trade and family ties. Other African countries (Ghana, Cameroon, Togo, etc.) also rank high as source markets for both formal tourists and same-day visitors. Beyond Africa, Europe and North America provide a significant portion of Nigeria’s long-haul visitors. The United Kingdom (Nigeria’s former colonial power) and the United States are traditionally among the top non-African source countries, driven by business travel (oil & gas, finance), diaspora visits, and NGOs. For instance, British and American travelers commonly visit Lagos and Abuja for corporate engagements. China also emerged as a growing source in the late 2010s, reflecting China-Nigeria trade ties and construction projects (though Chinese visitor numbers dipped during COVID travel bans). Overall, Nigeria’s international tourism mix skews toward business and VFR (Visiting Friends & Relatives) travelers rather than pure leisure tourists. This is evident from the high share of regional and diaspora visitors and the relatively low volume of typical vacation tourists in the mix.

Main Ports of Entry

Given Nigeria’s geography and travel patterns, the primary entry points for visitors are via airports, with some influx over land borders. Lagos’s Murtala Muhammed International Airport (LOS) is the gateway for a majority of long-haul arrivals – it’s the busiest airport, handling most intercontinental flights. In 2019 it processed over 3.2 million international passengers (alongside 4.4m domestic)​. Abuja’s Nnamdi Azikiwe Int’l Airport (ABV) is the second main entry, especially for diplomatic and conference travel, with about 1.0 million international passengers in 2019​. Other airports with international traffic include Kano (KAN) and Port Harcourt (PHC), though volumes there are much smaller (under 200,000 int’l passengers each in 2019)​. These secondary international airports mainly connect to regional destinations (e.g. Kano to North/West Africa and the Middle East, PHC to hubs like Lagos or occasional direct flights). Land borders also contribute to visitor inflows: road crossings from Benin, Niger, and Cameroon see numerous entries (especially traders and expatriates from neighboring states). Many of these are now counted as tourists if they spend at least a night. For example, the prominence of Nigerien and Beninese visitors​ implies heavy use of land crossings at Seme border (Benin–Lagos corridor) and Kano/Katsina borders (Niger–Nigeria). Seaports are a negligible entry channel for tourists (used only by few cruise ships or overland segments). In summary, Nigeria’s visitor arrivals are funneled chiefly through Lagos and Abuja airports for non-African travelers, while regional African visitors often arrive by land or short-haul flights.

4. Overnights & Occupancy Rates

Overnight Stays

Data on tourist overnight stays in Nigeria show the dramatic impact of COVID-19 and subsequent recovery. Total hotel guest nights plunged in 2020 as international and domestic travel halted. By 2021, an average tourist (international) stayed about 7 nights per trip – a slight increase from prior years​., likely because those who did travel tended to stay longer (perhaps due to quarantine rules or combining multiple purposes in one trip). With travel rebounding in 2022–2023, overall overnight stays in hotels have risen sharply. However, a detailed breakdown by hotel category (luxury vs mid-range vs budget) is not comprehensively tracked at the national level. Industry observations suggest that upscale hotels in major cities capture a significant share of total room-nights due to their larger size and higher year-round occupancy. Mid-scale and budget hotels, which are far more numerous, serve mostly domestic travelers and shorter stays (e.g. 1-3 night stays for local business or transit). As a result, the distribution of overnights likely skews toward the upscale segment in revenue terms, even if economy hotels account for many individual bookings.

Occupancy Rates

Hotel occupancy in Nigeria averaged around 50% in the late 2010s, reflecting steady but unspectacular demand relative to capacity​. In 2018, the national occupancy rate was about 49.8%​, and 2019 was in a similar range (~50-55% by estimates) given modest growth that year. Occupancy was highly differentiated by location and category, though. Lagos hotels enjoyed higher-than-average occupancies – in January to July 2019 Lagos averaged ~56.7% occupancy vs 53% in Abuja​. Peak months in Lagos (e.g. late 2019) could see occupancies above 65%, especially in top business hotels. The pandemic crushed occupancy in 2020: during April–June 2020, occupancy fell into single digits in Abuja (below 10%) and averaged only ~28% in Lagos under lockdown​. Many hotels closed temporarily, and those that remained open housed mainly quarantine guests or essential workers. As restrictions lifted, occupancy began recovering: by H1 2021, major city hotels were filling 30-50% of rooms on average.

A robust rebound came in 2022. In the first half of 2022, the hospitality sector recorded around 70% average occupancy according to industry stakeholders​ – a remarkable return to, and even surpassing, pre-pandemic levels. Most international-brand hotels in Nigeria achieved 70–80% occupancy in H1 2022, while many independent hotels saw 50–60%​. This reflects a two-speed recovery: well-known upscale hotels benefited from the surge in corporate and foreign travelers once borders reopened, whereas smaller local hotels were slightly slower to recover patronage. By late 2022, Lagos’s hotel market in particular hit multi-year highs – Lagos average occupancy peaked at 68.4% in 2022, the highest in a decade​. Abuja also improved with the return of conferences and government events, though its annual occupancy lagged Lagos (Abuja’s dependence on government business means demand can be seasonal around the political calendar). Secondary city hotels (in provincial capitals) generally run lower occupancies (often 40-50%) due to weaker year-round demand and competition from informal accommodation.

Occupancy by Category

If segmented by hotel category, upscale hotels (4-5 star) have been leading the occupancy recovery. Their affiliation with global brands and corporate agreements helped push occupancies well above 60% once travel normalized. Mid-range hotels (3-star) saw more variable performance – those in prime locations often reached 50-60% occupancy in 2022, while others struggled with <50% if reliant on discretionary spend from locals. Budget hotels and guesthouses tend to have lower occupancy (often under 40% on average), partly because they are oversupplied in some cities and cater to price-sensitive segments with irregular travel patterns. One clear trend is the resilience of demand for quality: in the recovery phase, travelers (especially business and international ones) gravitated to hotels with trusted hygiene and service standards, boosting branded upscale properties. This left lesser-known budget operators with a slower rebound. Overall, Nigeria’s hotel occupancy rates returned to roughly 70% in top-tier hotels and ~50-60% in the broader market by 2023, indicating strong demand recovery but also highlighting the gaps between different classes of hotels​

(Table: Illustrative Occupancy Trends by Year and Segment)

Sources: Industry reports and BusinessDay interviews​

5. Hotel Supply

Number of Hotels & Rooms

Nigeria has a substantial hotel supply that grew modestly from 2019 to 2023. According to industry data, the country had approximately 3,139 hotel establishments in 2023, up from around 2,800 in 2018​. This figure includes everything from small motels and guest houses to large luxury hotels. In terms of capacity, Nigeria’s hotels and similar lodgings provided about 3.2 beds per 1,000 inhabitants as of 2021​. With a population over 200 million, that translates to roughly 640,000 hotel beds nationwide (or on the order of 300,000+ rooms, assuming ~2 beds per room). This density of hotel supply is low compared to more mature tourism markets, indicating room for further expansion. Lagos alone accounts for tens of thousands of quality rooms, and Abuja several thousands, but many smaller cities have a fragmented supply of informal hotels.

Key Players and Brands

The Nigerian hotel sector is a mix of international chains, regional brands, and indigenous operators. Major global hotel companies have established a significant presence, especially in Lagos and Abuja:

• Marriott International – via its acquisition of Protea Hotels, Marriott leads in number of properties. There are multiple Protea by Marriott hotels across Lagos (e.g. in Ikeja, Victoria Island) and other cities (Enugu, Benin City, etc.). Marriott opened its first flagship-branded hotel in Nigeria (Marriott Hotel Ikeja) in 2021, and also manages legacy Starwood properties like Sheraton Lagos and Sheraton Abuja.
• Hilton Hotels – notably operates the Transcorp Hilton Abuja, one of Africa’s leading business hotels with 667 rooms. Hilton also introduced Curio Collection (Legend Hotel Lagos Airport) and has pipeline deals for Lagos. The Transcorp Hilton in Lagos (Ikoyi) is under development, and Hilton’s presence is set to grow through partnerships with local investors (Transcorp Plc, etc.).
• Radisson Hotel Group – aggressively expanded in Nigeria in recent years. It has Radisson Blu Anchorage in Lagos Victoria Island, Radisson Blu Ikeja, plus Park Inn by Radisson in Lagos (Apapa) and Abeokuta, and a Radisson hotel in Abuja. Radisson has positioned itself to capture both upscale and mid-market segments, announcing new builds in cities like Port Harcourt and Abuja.
• Accor – The French group had a smaller footprint but is now scaling up. Accor (through its investment partner Kasada) acquired the Southern Sun Ikoyi hotel in Lagos in 2022 and rebranded it to Mövenpick​. Accor also has legacy brands like Mercure or Pullman in pipeline discussions, and operates hotels in nearby West African countries, indicating potential growth in Nigeria.
• IHG (InterContinental Hotels Group) – IHG opened the InterContinental Lagos in 2013 (Nigeria’s first 5-star by a major chain at the time), but due to ownership disputes that hotel was reflagged as Lagos Continental (independent). IHG is reportedly looking to re-enter; it still has a Holiday Inn in Lagos and may bring back brands like InterContinental or Crowne Plaza via new projects as the investment climate improves.

Alongside these “Big 5” global chains​, regional and local hotel brands play an important role. South Africa’s Tsogo Sun (under the Southern Sun brand) managed the Ikoyi hotel until its sale. Golden Tulip (a Louvre Hotels/Travelodge brand) manages a few hotels in Nigeria (in Lagos, Port Harcourt, etc.). BON Hotels, a South African chain, has taken over management of several mid-scale hotels in Nigeria in recent years (including former Protea franchises) and is expanding its portfolio. Transcorp Hotels Plc, a Nigerian company, owns the Transcorp Hilton Abuja and Transcorp Hotels Calabar; it’s also developing a new flagship in Lagos. Other indigenous operators include Eko Hotels & Suites (the largest hotel in Lagos with 825 rooms, locally owned), Federal Palace Hotel (Sun International previously managed it), and numerous boutique hotels often owned by state governments or private firms (e.g. Bayelsa State’s Wellington Hotel, Ogun State’s Conference Hotel, etc.).

Supply Distribution

The quality hotel supply is heavily concentrated: Lagos and Abuja together comprise a large share of Nigeria’s upscale rooms. According to a survey of branded hotels in 2022, Lagos had roughly 5,000–6,000 internationally branded rooms, Abuja around 2,000, and the rest of the country fewer than 2,000 combined in branded supply. Most other establishments are small independent hotels (10–100 rooms). The midscale segment (3-4 star) has been identified as a key growth area​ – many new entrants and conversions are targeting this space to cater to Nigeria’s growing middle class and regional business travelers. Budget hotels remain plentiful but often unorganized; brands like IBIS (Accor) have only a minor presence, so the budget branded segment is still an opportunity.

Overall, Nigeria’s hotel supply grew at ~2.2% CAGR in 2018–2023​ – modest, due to economic hurdles and project delays. Those hotels that did open in this period include the Marriott Ikeja (2021), Radisson Blu Abuja (2022), and several smaller properties. The relatively slow growth in new supply, combined with demand recovery, has led to high occupancy and pricing power for existing hotels by 2023, as discussed next.

6. Average Daily Rate (ADR) & RevPAR Trends

Average Daily Rate (ADR)

Nigerian hotels command some of the highest room rates in Africa, especially in top-tier properties. In 2018, the average daily rate was about $140 (USD) nationwide​. ADR in Lagos and Abuja’s upscale hotels often exceeded $150–$200/night pre-pandemic, buoyed by corporate clients and limited competition. During 2019, ADR generally held steady or saw slight growth (a PwC report noted Nigeria’s revenue gains in 2018 came largely from increased ADR rather than occupancy​). However, with the naira’s depreciation and inflation, there is a distinction between ADR in local currency and USD. Hotels frequently price rooms in USD or adjust rates to track the parallel exchange rate, to cover costs of imports and maintain value – this means nominal ADR in naira rose significantly from 2019 to 2023.

In 2020, ADR trends were volatile. Some hotels slashed rates or offered promotions to attract the few travelers during the pandemic, while others closed entirely (reporting zero revenue). On average, effective ADR dropped in 2020, but not as sharply as occupancy – meaning those who did book often paid near-normal rates (the market mix shifted to essential business travel which is less price-sensitive). By late 2021, ADR had started to climb back, in part due to inflation.

The real turning point was 2022 and 2023, when Nigerian hotels not only recovered pricing power but exceeded prior benchmarks. Industry analysis for Lagos shows that by end of 2022, both ADR and RevPAR had surpassed pre-pandemic levels​. Hoteliers were able to raise rates thanks to robust demand and little new supply. Lagos’s ADR in 2022 grew substantially, contributing to a 43% higher RevPAR compared to 2019​. In fact, ADR surged ~35% year-on-year in 2023 in Lagos​ – a remarkable jump even after accounting for inflation. Trevor Ward of W Hospitality Group noted that 2023 ADR was about 8% higher in real terms (inflation-adjusted) than in 2019, marking the first significant real ADR increase in over a decade​. This indicates hotels could charge more without losing customers, due to the demand-supply imbalance. For example, 5-star hotels in Lagos in 2023 were often charging above ₦120,000 per night (≈$150-200 depending on exchange rate), whereas a few years prior the same might have been ₦70,000-80,000 (albeit at a different exchange value). Mid-scale hotels similarly raised rates; a room that cost ₦30,000/night in 2019 might be ₦50,000+ by 2023. Notably, these high rate increases outpaced general inflation, suggesting strong pricing power and a willingness among clients to absorb higher travel costs​.

Revenue per Available Room (RevPAR)

RevPAR – the product of occupancy and ADR – reflects the overall performance and profitability per room. Nigeria’s RevPAR trajectory mirrored the rollercoaster of the pandemic and recovery. Prior to COVID, RevPAR was on a gradual rise: in 2019, Lagos hotels saw RevPAR growth of a few percent, with Africa-wide data showing a RevPAR around $67 by August 2019​ (Nigeria’s figure would be a bit higher than the continent average). When travel halted in 2020, RevPAR plummeted to unprecedented lows (single digits in USD for many hotels during Q2 2020). 2021 brought a partial uptick, but it was 2022 when RevPAR truly skyrocketed. Thanks to ~70% occupancy and restored rates, leading hotels’ RevPAR in H1 2022 neared or equaled their 2019 H1 performance​. By year-end 2022, Lagos RevPAR was 43% above 2019’s level​ – meaning Lagos outperformed not just its own pre-COVID results but also outpaced recovery in many global markets. This was aided by the fact that Lagos’s demand is largely business travel (which rebounded fast) and virtually no new rooms were added, concentrating demand in existing hotels. Abuja’s RevPAR also improved significantly in 2022, though exact figures are lower than Lagos (Abuja’s rates are slightly lower and occupancy slightly more erratic).

In 2023, RevPAR continued to grow robustly. With ADR jumping ~35% and occupancy remaining high, Lagos hotels likely saw double-digit RevPAR growth over 2022. Industry experts lauded Lagos’s hotel market as one of the most resilient globally in terms of post-pandemic recovery​. It’s worth noting that much of the RevPAR gain is a price effect; Nigeria’s inflation and currency depreciation led hotels to hike nominal rates, which inflate RevPAR in local currency. But even in USD terms (adjusting for currency), the fact that 2023 ADR/RevPAR exceeded 2019 by ~8% real indicates genuine growth in value. Outside the main cities, RevPAR gains were also recorded as provincial hotels filled with more domestic travelers, although their absolute RevPAR (often under $30) remains far below Lagos’s (which can exceed $100).

(Figure: Lagos Hotel Performance Index 2019–2023)​

Lagos hotel market recovery: Average occupancy peaked at 68.4% in 2022 (10-year high), and RevPAR in 2022 was 43% above 2019’s level. Robust business demand and limited new supply enabled Lagos to outperform many global cities in post-pandemic hotel metrics​.

ADR & RevPAR by Segment

Generally, luxury hotels (e.g. 5-star) have the highest ADR – in Lagos, these can charge $200+ and achieve RevPAR of $140 or more on good nights. Mid-range hotels might have ADR in the $60–$120 range depending on location, and lower occupancy, yielding RevPAR perhaps $40–$80. Budget accommodations often have ADR below $50 and low occupancy, so RevPAR in the teens or single digits USD. Interestingly, the gap widened post-pandemic: upscale hotels gained disproportionate RevPAR growth (as corporate clients returned and could pay higher rates), whereas many budget hotels struggled with price-sensitive local clientele in an inflationary environment. This has pushed overall market ADR upward.

In summary, 2019–2024 ADR and RevPAR in Nigeria’s hotel industry tell a story of resilience. After a deep slump in 2020, the market not only recovered but reached new highs by 2022/23. High demand against a constrained supply allowed Nigerian hotels to significantly boost room rates, driving RevPAR growth. For investors and operators, this trend suggests attractive yield potential – although sustaining it will depend on the economy stabilizing (so that businesses and consumers can continue to afford rising room rates) and on how quickly new supply enters to create competition.

7. New Hotel Developments and Investment Pipeline

Despite economic hiccups, Nigeria has remained a focus for hotel development in Africa, with numerous projects announced between 2019 and 2024. According to W Hospitality Group, Nigeria has the second-largest hotel development pipeline in Africa (after Egypt). As of early 2024, Nigeria’s pipeline stood at 50 hotels with 7,622 rooms in planning or construction​. This is an impressive volume, representing a substantial expansion (for context, it’s ~36% of the existing stock in Lagos). However, project execution has been sluggish – only a fraction of the pipeline is under active construction (around 20% in Lagos as of 2022)​ – due to financing challenges, high construction costs, and other headwinds like FX shortages.

Pipeline Highlights (last years)

Much of the new development is concentrated in Lagos, reinforcing its status as an investment magnet. Notable projects and openings include:

• Transcorp Hilton Lagos – A flagship 300+ room hotel in Ikoyi, Lagos being developed by Transcorp Hotels Plc in partnership with Hilton. It has been under construction for several years and is expected to open in 2024/25, adding a new luxury option in Lagos.
• Marriott Lagos Ikeja – Opened in 2021, this 250-room hotel marked Marriott’s debut under its core brand in Nigeria. It signifies investor confidence in the airport/central Ikeja area. Adjacent, a Sheraton Ikeja exists (Marriott group), and renovations/upgrades are ongoing there.
• Mövenpick Hotel Ikoyi – Formerly Southern Sun Ikoyi, this ~180-room hotel was acquired by Kasada Capital (a hospitality investment fund) and rebranded in 2022 to Accor’s Mövenpick​. The deal exemplifies a trend of value-add acquisitions (taking over existing assets rather than building new) in Nigeria’s high-barrier market. Kasada’s move signals continued foreign investment appetite.
• Radisson Collection Abuja – Announced as an upscale Radisson property in Abuja (conversion of an existing hotel) to open by 2024. Radisson also has a pipeline for more Radisson Blu in Lagos (Victoria Island) and Park Inn in cities like Abeokuta and Warri, expanding their footprint.
• Novotel / Mercure Development – Accor has hinted at bringing its midscale brands (Novotel, Mercure) to more Nigerian cities. A Novotel hotel in Lagos is reportedly in the pipeline, and Accor is exploring opportunities in Port Harcourt and Abuja as well.
• Boutique and Apartment Hotels: There’s growth in serviced apartments and boutique hotels to cater to long-stay business travelers. For example, Fraser Suites Abuja (opened 2018) set a high standard for luxury serviced apartments. New apartment-hotels in Lagos (Eko Atlantic’s planned developments, for instance) are in the works, blending residential and hotel use.

Geographic Expansion

While Lagos and Abuja dominate, some pipeline projects target other locations. Port Harcourt is set to get new internationally-branded hotels (e.g. a planned Hilton Garden Inn was announced, and a Protea is under development) to serve the oil industry. Enugu and Benin City have seen local investors partnering with brands like Marriott (Protea) for new hotels, betting on regional economic growth. Kano had a historical project (Four Points by Sheraton) stalled in the 2010s; there is talk of reviving such plans as security improves. Cross River State has sought investors to refurbish the Obudu Mountain Resort and to build more rooms in Calabar, aiming to boost tourism – though progress has been slow.

Trends in Investment

A key trend is the shift from new builds to conversions/acquisitions. Building hotels in Nigeria has high costs (due to import duties on materials, high borrowing costs around 20% interest, etc.). Therefore, investors like Kasada are opting to buy and reposition existing hotels, which can be quicker to market. Another trend is focusing on midscale and upscale (not ultra-luxury) – PwC identified the mid-scale as the best opportunity​, and indeed many pipeline projects are 3-4 star business hotels that can tap the mass corporate market. Luxury projects are fewer (as the market is already well-served by a handful of five-star properties in Lagos/Abuja).

Nigeria’s pipeline being second-largest in Africa underscores developer optimism​. The Big 5 hotel chains are driving this – Marriott, Hilton, Accor, Radisson, IHG collectively account for the bulk of the signed deals​. For example, Marriott International leads with numerous projects (through Protea and its premium brands), and Hilton and Accor are also very active​. The government’s improvement of infrastructure (e.g. the new Lagos airport terminal opened in 2022​, highways and rail projects) and policy support (like easier visas, tourism promotional campaigns) are gradually creating a more conducive environment for hotel investment.

That said, project delays are common. Many announced hotels in the 2019–2021 period have had opening dates pushed out. Reasons include financing gaps, COVID-era construction halts, and currency volatility affecting budgets. The high interest rates and recent removal of fuel subsidies (2023) also made investors cautious in the short term​. As Trevor Ward noted, “headwinds for new hotel development are severe right now”​, resulting in slower realization of the pipeline than forecast. Nonetheless, opportunities exist in the interim – with demand outpacing supply, some operators are converting alternative properties to hotels or expanding existing ones. For instance, we see expansions at Eko Hotels and plans to add new towers, and smaller developers are adding hotel floors to mixed-use projects in Lagos.

Actionable Insights

Investors looking at Nigeria’s hotel market should note: strong demand fundamentals (especially business travel and a huge domestic market) are driving performance to record highs post-2021. There is room for new entrants, particularly in underserved cities and the mid-range segment. However, success requires navigating Nigeria’s economic challenges – securing forex, managing construction costs, and possibly partnering with local firms or funds (like how local conglomerates have teamed with international brands). Given that existing hotels are enjoying high occupancy and ADR, an investor might find acquiring an operating hotel (and renovating) yields quicker returns than a greenfield project. Also, the MICE sector and adventure/experience tourism have growth potential; properties that can host conferences or provide unique cultural experiences could tap into emerging demand​. With government initiatives like visa liberalization and hopefully more tourism-friendly policies, Nigeria could gradually attract more international leisure tourists, adding another demand stream for hotels. In summary, the 2019–2024 period has proven the resilience and profitability of the Nigerian hotel industry. Going forward, stakeholders can leverage these trends – high domestic demand, interest from major brands, and a favorable supply-demand gap – while strategizing around the macroeconomic and operational challenges that are characteristic of this market.

Sources:

• AfDB, Nigeria Economic Outlook 2023​​
• BusinessDay Nigeria, Aviation Sector & Hotel Performance Reports​​​​
• Travel & Tour World, Nigeria Tourism Update 2024​
• Worlddata (UNWTO) – Nigeria Tourism Statistics​
• W Hospitality Group / Estate Intel – Lagos Hotel Market and Pipeline Insights​​​
• ResearchandMarkets – Hotels & Motels in Nigeria 2024 (MarketLine)​​
• PwC, Hospitality Outlook: 2019-2023 (Nigeria)​.