The Hospitality Industry In Africa Is Not Under Threat, It’s Just Evolving
The Hospitality Industry In Africa Is Not Under Threat, It’s Just Evolving
In the wake of the gradual return to life and business activities following the COVID19-inspired global lockdown to contain the spread of the deadly disease, Digital Landlords, a Lagos-based real estate has predicted a surge in the real estate, hospitality, and tourism sectors. This comes as more people are expected to seek out desired trips away from home to their preferred vacation destinations or even a short break away from home after working remotely for the majority of the previous year.
While hotel bookings have suffered as a result of the COVID19 pandemic and global lockdown, short-let homes and apartments bookings have soared, with the number of bookings continuing to increase as normalcy returns.
According to Market Watch, the short-term rental market has grown significantly in recent years and is expected to continue growing rapidly over the next five years, with an occupancy rate of 70% projected in 2021.
Short-term rental adoption is closely related to tourism growth, as travelers have widely adopted short-term rentals, such as vacation homes on Airbnb and other booking channels, resulting in one of the hottest arms of the sharing economy. Indeed, short-term rentals profited homeowners/investors 30% more than long-term leases, with a global market valuation of $169 billion in 2018.
30 million people could live in Lagos by 2035
A growing urban and middle-class city necessitates the establishment of recreational facilities, tourist lodging, and activities. According to African Futures Papers, close to 30 million people could live in Lagos by 2035, transforming Nigeria's commercial hub into the continent's largest megacity. Simultaneously, West Africa is expected to house more than a third of Africa's urban population. Lagos, Nigeria's largest city, is expected to grow to be one of the fastest growing in the next twelve years, eventually becoming a megacity by 2030.
Keji Giwa, the Chief Executive Officer of Digital Landlords, stated that digitization and the high cost of hotel rentals have created an enormous opportunity for short let homes to thrive. “Why on earth have I been paying exorbitant hotel room rates when I could pay less for an entire apartment in the same prime location and close proximity to the best bars, restaurants, shopping centers, and beaches?” Keji Giwa asked after his first short let experience in 2019.
He stated, "Today, Lagos Island is undergoing a real estate boom, fueled by high-yield rental income generated by short-term rental opportunities." This can be viewed as a threat to the hospitality industry as well as an opportunity. The prospect of its continued expansion should serve as a timely warning to hotels that offer rooms at the same or lower prices than consumers can pay for an entire apartment.”
Keji Giwa, who disclosed that his company's average booking duration increased 350 percent for group bookings from four to fourteen days and by 230 percent for single bookings from two to seven days, emphasized that the hospitality and tourism industries are evolving to meet the needs of yearning end users.
“Hotels can choose to evolve or compete, but with digitization, automation, and artificial intelligence, digitally focused start-ups in the short-let rental market can create a terrifying monster for large and small hotel chains simply by leveraging technology to deliver on-the-go instant bookings, convenience, and comfort, as well as the use of virtual booking agents in place of human agents,” he explained.
With over 80% of Nigeria's population having internet access via mobile devices, the country is well-positioned to benefit from global digital opportunities, according to a 2021 digital report by We Are Social. In addition, this enables more online rental platforms to capture demand for domestic and international bookings where affordability and luxury coexist.
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