As Nigeria receives little in the way of mainstream leisure travellers, the tourism sector is represented mainly by the domestic, visiting friends and family (VFF), and corporate travel segments. The country is ranked 178th globally in terms of the sector’s size relative to its GDP, with the direct and indirect contributions measured at 1.5% and 3%, respectively, according to the World Travel & Tourism Council (WTTC).

The Numbers

Tourism directly accounted for 1.3% of the national workforce in 2013, or 866,000 jobs, according to the WTTC’s 2014 country report. The sector’s total contribution to employment in 2013, including jobs indirectly supported by the industry, was 2.8%, or 1.84m workers. This is expected to fall by 1.4% in 2014 to 1.81m jobs and rise by 3.6% per annum thereafter, reaching a total of 2.59m jobs in 2024, or 3% of the workforce. The federal government is targeting average sectoral growth of 6.2% over the course of the decade between 2013 and 2023, by which point tourism is expected to more than double its contribution to the overall economy to hit some 6.8%.

Strength & Challenges

The country most certainly has cultural assets and rich natural beauty that could be further developed and showcased. Encouraging more domestic tourism, meanwhile, can assist in nation building as well by engendering an appreciation among Nigerians for the diversity of sites and cultures on offer within their own country.

Challenges to the nation’s longer-term growth ambitions, however, come in the form of security issues in the north of the country and the recent regional Ebola outbreak, two factors that have discouraged locals and foreigners from non-essential travel and placed the hospitality trade in a state of uncertainty.


Investors, on the other hand, remain undeterred and are keeping an eye on the long term. According to the WTTC, travel and tourism investment in 2013 measured N264.2bn ($1.6bn), amounting to 4.8% of total investment – below the 6.1% average for Africa but above the 4.4% worldwide average. The WTTC expects that investment in the sector will increase by 5.1% per annum over the next 10 years.

Indeed, despite the hurdles, Africa’s largest economy continues to grow at a steady pace – forecast at 5.5% in 2015, according to the World Bank – and, in turn, so too does demand for hospitality infrastructure and travel services that are currently undersupplied, making Nigeria one of the continent’s most lucrative markets for those able to navigate the challenges.

Rankings & Performance

According to the World Economic Forum’s “Travel and Tourism Competitiveness Report 2013”, Nigeria finished 127th out of 140 countries surveyed, a marginal improvement over 2011, when it ranked 130th. The metrics in which it fared poorly were related to safety and security (136th), human resources (122nd), ground transport (119th) and visa requirements (126th). However, areas in which it was rated in the top 100 included both natural (68th) and cultural (98th) resources, and environmental sustainability (63rd). These rankings provide evidence that should some of the constraints and challenges deterring visitors be overcome, there are local assets that could be leveraged to bolster Nigeria’s tourism offer.

The country’s poor overall rankings are compounded by the fact that it is far from being considered a “value-for-money” destination, with hotel prices among the highest in the world, and airport taxes and landing fees contributing to high airline fares.

Over the course of 2013 international arrivals declined by 10.47%, according to a Timetric travel and tourism report, a fall-off attributed to travel advisories dissuading prospective visitors. When breaking the figure down by purpose of visit, the number of arrivals coming for leisure dropped by 14.87%, while the business travel declined by 3.28%. This demonstrates that business travel is more resilient to security concerns and less price sensitive, and has resulted in the share of business travellers increasing from 33.7% of the total in 2009 to 45.9% by 2013. The WTTC predicts that in 2014 Nigeria will attract a total of 900,000 international tourists.

Regulation & Promotion

The Federal Ministry of Culture, Tourism and National Orientation sets out policies to guide the sector, while the Nigerian Tourism Development Corporation (NTDC) is the parastatal agency tasked with destination marketing. In July 2014, as part of the country’s centenary celebrations to commemorate the unification of its southern and northern protectorates, the authorities unveiled a new brand identity campaign titled “Fascinating Nigeria”. A dedicated website was created that showcases the country’s attractions and cultural highlights. The NTDC has said it will be looking to establish tourism desks at airports across the country and has put together a cultural festival calendar to help attract visitors.

While these efforts might seem par for the course for any country that wants to boost tourism, they are a significant step forward in Nigeria’s efforts to increase tourist and investment interest. In addition to promoting existing attractions, the NTDC has set itself the goal of establishing at least one new tourism site and cultural identity centre in each of Nigeria’s six geopolitical zones. These include Tinapa Business and Leisure Resort in Cross River State, Farin Ruwa Falls in Nasarawa State and the Olokola Cultural Resort in Ondo State.

Domestic Focus

The WTTC estimates that domestic travel spending accounted for 91.6% of direct travel and tourism GDP in 2013. Accordingly, the NTDC acknowledges that focusing on further expanding the size of the domestic market presents the quicker win, especially as domestic travellers are less fazed by security concerns. Having Nigerians visit different parts of the country also helps bolster national pride and patriotism through a greater appreciation of its demographic diversity. While the “Fascinating Nigeria” campaign, which will include an annual road show to showcase cultural attributes like music, dance, costume and food, is intended to present a favourable impression of Nigeria to the international community, on a domestic level it is also an exercise in nation building.

A logical extension from encouraging more domestic travel is tapping into the market potential of the Nigerian diaspora. While even the chairman of the Nigerian House of Representatives’ committee on diaspora affairs, Abike Dabiri-Erewa, says there is no record of how many Nigerians live abroad, varying estimates put the number at 5m-15m. Meanwhile, the World Bank estimates that total remittances to the country in 2014 will reach $21bn, suggesting that this population has at least some discretionary income to travel.

International Draw

On top of the motivation of VFF, Nigerian cinema and music have been identified by the NTDC as assets to be leveraged in strengthening cultural links with Nigerians living abroad and Africans in general. The Nollywood movie industry has grown to become the second largest in the world in terms of the volume of output and is highly popular throughout sub-Saharan Africa. Many of the country’s musicians top the charts throughout the continent as well.

In addition, Nigeria is not short of natural and historical sites and attractions that would be of interest to international visitors. A UN World Tourism Organisation report suggests that eco- and adventure tourism hold significant potential. The country boasts waterfalls, beaches, eight national parks and two UNESCO World Heritage sites (Sukur in Adamawa State and the Osun-Osogbo Sacred Grove in Osun State), and is home to more than 1300 animal and 885 bird species, according to the Nigeria National Park Service. The Cross River National Park, a tourist-friendly park in the Niger Delta, includes one of the world’s oldest rainforest habitats.

Heritage tourism is another potential growth segment. Nigeria was at the epicentre of the Atlantic slave trade that took place between the 16th and 18th centuries, and according to DNA studies, up to 70% of African Americans could be of Nigerian descent. Various stakeholders are therefore in the process of restoring landmarks relevant to the slave trade as a means of preserving and showcasing the country’s history.

Nigeria is also well known for the variety and scale of its festivals, including the four-day Argungu Fishing Festival, which started in 1934; the Calabar Carnival, often dubbed Africa’s biggest street party, in Cross River State; and the Eyo Festival, which is unique to Lagos. These festivals could be further packaged as a means of encouraging business or VFF travellers to extend their stay and see more of the country.

Hotel Pipeline

According to W Hospitality Group’s “2014 Hotel Pipeline Report”, Nigeria has the most hotel rooms slated to open within Africa. In total 6614 rooms are expected as a part of 40 deals. This equates to 11 more hotels than second-place Morocco and nearly six times more than Ghana, which is second in West Africa. However, the report cautions that pipeline deals are often delayed and in some cases do not materialise. “Of all the rooms announced to be hitting the market between now and 2018, we expect about half to happen, as funding and permit issues lead to delays and projects being scrapped. This is the reality in this part of the world,” Damilola Adepoju, a senior consultant at W Hospitality Group, told OBG. Excluding deals that are in the planning stage, Nigeria drops to fourth place, with 2467 rooms in construction.

Luxury First

The list of hotel chains slated to be opening establishments in Nigeria includes international brands that will be joining some of South Africa’s leading brands – the Protea Hospitality Group (which was recently acquired by Marriott), Sun International and the Southern Sun. In most cases, Western chains’ first foray into the market will be in the luxury or upper-end segment. “International groups, for prestige and reputation, usually want the first property they are associated with in a new market to be in the top end,” said Adepoju. Accordingly, the InterContinental Hotels Group’s most recent opening was an InterContinental. Accor’s newest development will carry the MG allery brand. Starwood’s new openings consist of a Le Meridien and an additional Sheraton, while Carlson Rezidor is adding a Radisson Blu to its portfolio.

Typically, most hotels are operated under a structure in which the developer and owner is Nigerian, with the international brands brought in on management contracts. In turn, most research points to there being a supply and pipeline gap for mid-market options. This could bode well for groups such as Hilton (via its Double Tree brand), Accor (through its Ibis brand), Best Western and the Protea Group, all of which manage mid-range properties within their Nigerian portfolio.

For David Kliegel, the general manager of Sun International’s Federal Palace Hotel and Casino, the franchising model makes it paramount that the right local partner is selected, both in terms of finding a group with a development track record to ensure the hotel is opened on schedule and for quality control purposes.

For industry stakeholders, a standardised and universally agreed upon grading system for categorising hotels would be a welcome initiative. “The challenge is that federal and state grading systems are not in sync, and this creates confusion,” Mark Loxley, general manager at the Southern Sun Ikoyi hotel in Lagos, told OBG.


With the majority of new stock potentially hitting the market to be concentrated in the luxury segment, supply and demand suggest that this should make a dent in average room rates (ARRs), which are some of the highest in the world. Based on a survey by the Hogg Robinson Group, a company specialising in travel management data, in 2013 the ARR in Lagos was $335, the fifth highest of any city in the world after Moscow, New York City, Geneva and Zurich.

The 2013 ARR did come down slightly from 2012, when, at $345, Lagos hotel prices were second only to Moscow. Kliegel hopes the decline will continue and is an indication of gradual market normalisation. “Around 500 quality rooms have been added to the market over the last few years. In the past, because of a lack of options, hotels could charge high room rates with little need to match those rates with quality. There is now more pressure to provide a decent value proposition.”

Adepoju concurs that new supply and competition have led to a dip in room rates, but notes, “The better-run branded hotels do not have to drop their rates as much as they are not competing on price.”

Looking ahead there could be a lull in new properties opening in the near future due to many new establishments having recently been launched, as well as a perception that a number of developers are in “wait and see” mode as the decline in oil prices, the regional Ebola outbreak and the instability in the north contribute to a state of uncertainty.

Managing Costs

Developmental and operational factors inflate hotel rates. Land is costly to acquire, the borrowing rates from local institutions are quite high and operating margins are squeezed by the need for hotels to run their own back-up generators. For Loxley, having to import consumables such as food ingredients and invest in security personnel and equipment also add to the considerable cost outlays. Adepoju, in contrast, attributes the expensive room rates mostly to market forces. “Payroll is cheap compared to elsewhere, and for branded hotels marketing costs are negligible as there are only a few top-end, quality brands competing in the market. In general it is not that expensive to run a hotel and those that are able to charge high rates are enjoying healthy profits.”

Location, Location, Location

Lagos and Abuja, as the commercial and administrative capitals, respectively, account for the bulk of existing stock and new developments. “So long as the economy keeps growing at the current pace, we do not envision new supply outpacing demand in either city,” said Adepoju. “Even if more projects were announced, invariably there are delays and some projects do not end up happening, so there should be a supply lag for some time.”

According to the MasterCard Global Destination Cities Index 2014, Lagos was Africa’s fourth-most-visited city in terms of overnight visitors, after Johannesburg, Cape Town and Cairo. Lagos fell two spots from the 2013 ranking in which it was the second-most-visited city in Africa. Its hotel market can be geographically separated between the city’s commercial and administrative hub of Lagos Island, and the more residential mainland. As infrastructure across the city improves and new private developments are created, more hotels are beginning to open up on the mainland and other islands. With greater availability of space, less congestion and untouched seafront vistas, these newer locations are also more conducive to hybrid resort, rather than purely business, offerings. Although the city’s infamous traffic makes proximity to workplaces a strong determining factor in hotel choice for business travellers, this could become a less important factor as traffic and public transportation improves.

Outside of Lagos and Abuja, Port Harcourt, which has emerged as the country’s oil capital and is a burgeoning industrial centre, is tapped to see strong property growth. Alongside Port Harcourt, most of the secondary markets where new establishments are popping up tend to be places that are seeing new industrial activity. “The degree to which hotels open in secondary cities will depend on the pace in which manufacturing and other non-oil industries advance,” said Loxley.

Calabar, the capital of Cross River State, is an exception to the pattern of new hotel developments purely following industry. The state receives around 1m tourists annually, attracted to its cooler year-round climate and colourful December festivals. The city is home to a number of major projects that will create further demand for both corporate and leisure visitors, including the Calabar International Convention Centre, which is expected to open in May 2015. According to Adepoju, Owerri, the capital of Imo State, also holds further leisure market potential, although maintaining consistent occupancy rates could prove to be a challenge as it is mainly a weekend and festival destination.


Nigeria is playing host to a growing number of conferences, which is to be expected considering its status as Africa’s largest economy. However, when examining the theme of the events hosted, a significant portion are focused on the trade and investment prospects and political matters related to the country itself, indicating that it is not capturing regional or international events. “Considering the cost of flights and hotels, traffic issues and visa complications, conference organisers are unlikely to select Nigeria to host an event that is not Nigeria-specific,” said Kliegel.

In 2013 Nigeria ranked 92nd in the International Congress and Convention Association’s (ICCA) global rankings, having hosted seven ICCA certified conferences. Within Africa, Nigeria was tied for 10th place, well below South Africa, which hosted 97 such events, Kenya with 29 and Morocco with 23.

Entry & Accessibility

Travelling to Nigeria can be challenging and expensive due to a restrictive and complicated visa regime in terms of documentation requirements and restrictions for non-ECOWAS citizens. Due to the large corporate passenger base, Nigeria is a lucrative airline route, and prior to the Ebola outbreak, most carriers serving the country were experiencing high load factors. For the more price-sensitive consumer, airline costs, which are driven up by high taxes and fees and limited competition, can be prohibitive. For example, a flight between Lagos and Abuja, which takes just 1 hour and 15 minutes, costs around $140, with the base fare being about $60 and the remaining $80 accounted for by taxes and fees.

Safety & Security

On the hierarchy of travel considerations, safety and security trump price and accessibility, and of late Nigeria has been affected by both the Ebola outbreak and the ongoing violence in the north linked to Boko Haram. While the country was declared Ebola-free in October 2014, the outbreak prompted many airlines to temporarily suspend operations to Liberia and Sierra Leone, with a resulting knock-on effect on intra-regional traffic.

“While Nigeria is not unsafe, visiting at this time might make it more difficult for you to travel elsewhere because of the stigma associated with the region,” said Kliegel. “The continent gets painted with one brush and this is severely hurting the hotel trade.”


While the tourism sector faces significant challenges, Nigeria is a market that any travel or hospitality business with serious international and continental ambitions can ill afford to avoid. The sector is anchored by a steady corporate base with deep pockets, and as the economy continues to grow and industrialise, the supply of hotel rooms is expected to lag demand for some time to come. If Nigeria’s natural and cultural offerings can be better packaged, and some of the prohibiting factors that currently deter discretionary travel can be addressed, a nascent leisure sector could emerge to diversify the visitor profile and encourage tourists to explore new Nigerian destinations.