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Profitability of hotel business in Nigeria

HOW PROFITABLE IS HOTEL BUSINESS IN NIGERIA? A hotel is an establishment that provides accommodation to tourist and travellers all over the world on a short or long term basis.

Hotel business is a very profitable venture because people tend to move around every day for the purpose of business or leisure. Investors are encouraged to venture into it because as long as humans continue to move around the globe, profit is guaranteed.

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In Nigeria, hotel business seems to be flourishing; this explains why hotels are found in every corner or areas in major cities. In calabar for instance, new hotels keep springing up even though there already exists a good number of them. Hotels are classified and rated according to size, location, quality of services rendered and their names.

Profitability of hotel business in Nigeria

Hotels rated five star in Nigeria are aimed at providing tourist or travellers with luxury by world class services and facilities; some of their features are indoor pools, Jacuzzi, amazing views, 24 hour provision of excellent room services, internet access and other remarkable features.

The intercontinental hotel, Eko hotel and suites in Lagos, transcorp Hilton and Sheraton Abuja are very good examples of hotels with five star ratings. We also have hotels with four and three star ratings. Three star hotels are most common in Nigeria.

See: Top 10 Hotels In Nigeria and their Locations


SUITE HOTELS: these are exotic hotels that offer better space than average hotel rooms and perfect relaxation blends at high standards. There are lots of them in Nigeria wit Eko hotels and suites in Lagos as the most preferred in west Africa.

RESORT HOTELS: these are built in beautiful environments near recreational centres and tourist sites, they are ideal for tourists. They are mostly located away from major cities and have recreational facilities. The obudu mountain resort in cross river state is a perfect example. It offers horse riding, swimming, and cable car riding amongst other interesting activities.

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CONVENTION HOTELS: mostly used for conventions, they are large hotels with over two thousand rooms to contain convention attendants. They also have very large exhibition and meeting rooms. Examples are Eko hotels and suites in Lagos and the Lakeside hotel in tinapa calabar, cross river state.

HOTELS CONFERENCE: these are designed specially for conferences and cater for accommodation of conference participants. They provide high quality audio visuals, conference logistics amongst other services.

AIRPORT HOTELS: are specifically tailored for airport related clients who have overnight travel schedules or cancelled flights. They charge hourly or on a daily basis, they are perfect for travellers who won’t want to miss their flights.

Read Also: How to Start a Hotel or guest house Business in Nigeria

APARTMENT HOTELS: these are residential hotels with apartments that include a living room, guest room, well equipped kitchen and laundry space and house attendants to accommodate guests for short or long terms. They are suitable for families on vacation and company employees on special duties.

BED AND BREAKFAST HOTELS: these are small hotels that accommodate a maximum of twenty to forty guests at a time. Though not popular in Nigeria, most local hotels in Nigeria are beginning to mimic this system.

BUSINESS HOTELS: are most prominent of all kinds of hotels. They are flexible and can cater for the general needs of their guests. Computer services, internet services and other amenities are available here. They are all around Nigeria.

CONDO HOTELS: condominium hotels allow guest to purchase ownership of accommodation for a specific period. Condo hotels are commonly found in Abuja, Lagos and Port Harcourt.

CASINO HOTELS: these are hotels built specifically for gamblers. Every service provided here are in relation to gambling. Casino hotels are not common in Nigeria.

Profitability of hotel business in Nigeria

Before setting up a hotel, one must carefully consider which of the hotels mentioned above will be most suitable for the environment and location he intends to build. For instance, a resort hotel will do well in a place where there are tourist sites. Generally, hotel business will bloom in a state where tourism, business activities and entertainment activities thrive. Commercial states and cities like Kano, Onitsha, Aba, Ibadan are good for hotel business because of the constant influx of people for the exchange of services.

Apart from a favourable location, the profitability of hotel business is largely dependent on effective management. People who lodge in hotels expect comfort, luxury and quality. A hotel must be able to provide these if it is going to thrive.

Read Also: 9 Cheapest Hotels in Lagos and their Prices in Naira

Only satisfied customers will come back and refer you to potential customers. Effective management means quality services, security, well behaved, competent and customer friendly employees, modern facilities, experienced and professional managers.If these factors are not in place, the chances of making profit are low.

Hotels make very good profit especially where there are no competitors from banquet bookings, hall bookings for birthday parties, weddings, memorial services, seminars and other purposes. They also make good profits from room revenue as their operational cost is relatively lower than the total room rates.

Where demand for room service is low, they can reduce rates or offer discounts for special events to attract customers. Miscellaneous departments like the gym, spar, restaurants and bar, salon, parking space and sometimes rented space for shopping generates extra revenue and increases income.

It must be note that starting a hotel is capital intensive with very fixed costs of operations. A decline in tourism, business or general economic decline may leave hoteliers with a huge loss as demands for room may fluctuate or drop completely but this depends on the type of hotel you run.


Set your hotel apart from your competitors by offering excellent services at a fair price and enforcing customer friendly policies. Create a side attraction like free gym services, little souvenirs or any unique idea you can think of.
Ensure you have a stable supply of electricity as the importance of this cannot be over emphasized.

Retain good employees by keeping them satisfied and happy. Employees play a vital role in the success of any hospitality venture. Their attitude to your customers will determine your ability to build a good customer base.

Interact with your guest or customers personally, make them feel at home. Quiz them to find out your shortcomings and how to meet their demands and expectations.

Read: 9 Strategies to Succeed In Hotel and guest house Business in Nigeria

Be creative, proactive and productive. Create avenues for generation of extra revenue o income. Carry out research on a constant basis for innovation and development and you will definitely succeed.

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Lami Ogar

Lami is from cross river state and holds a B.sc in accounting from a Nigerian university. Writing for her is a form of detoxification, she has written several articles for Essence magazine and runs political commentary on twitter. InfoGuide Nigeria is a team of Resource Persons and Consultants led by Ifiokobong Ibanga. Page maintained by Ifiokobong Ibanga. If you need a personal assistance on this topic, kindly contact us.

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