Nigerian hotels and restaurants are having a tough time because of rising food and energy costs. This not only affects how much it costs to run these businesses but also impacts jobs, customer interest, and overall business operations.
Let’s break down how these rising costs are causing problems and what can be done about it.
Energy Costs and Their Effects
Energy costs have shot up by over 200 percent in the last two years, including the prices of petrol, diesel, and electricity. At the same time, food prices have reached their highest levels in over 20 years. Due to these increases, hotels and restaurants are forced to raise their prices, which leads to fewer customers. With fewer customers, these businesses earn less money, which may lead them to cut costs by laying off employees.
The higher prices are making people think twice about eating out or booking hotel rooms. For example, a study of 30 high-end restaurants and 20 hotels showed that customer visits dropped by 10-15 percent because of the price hikes, with many customers choosing to eat at home instead.
Impact on Jobs
Rising energy costs are putting a financial strain on hotels and restaurants, forcing some to reduce their workforce. In a recent survey, 30% of the businesses had to let employees go in the last six months due to increased overhead costs.
What Can Be Done?
To cope with these challenges, hotels and restaurants can:
– Adopt energy-efficient technologies by using less energy can help reduce costs.
– Advocate for better policies by pushing for government incentives for renewable energy. This can help ease the burden.
– Innovate and manage costs and find new ways to save on energy and food costs that can make businesses more resilient.
It’s also important for the government to recognize the hospitality industry as a key part of the economy. Providing access to affordable and long-term funding can help these businesses survive, keep jobs, and contribute to the country’s GDP.
Looking Forward
Addressing these challenges requires teamwork between business owners and policymakers. By doing so, the hospitality industry can adapt, stay competitive, and diversify the economy. This will not only attract foreign visitors but also boost local economies and create new opportunities in tourism and hospitality.
By Iyadunni Gbadebo [Director, Sales and marketing, Eko Hotel & Suites, Lagos, Nigeria]