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  • Ridwan J Lawal

Disrupting The Hospitality Industry In Africa: How 3 Nigerians Plan to Resurrect An Ailing Industry

Updated: Jun 17






OUR COMPANY


HighTable Africa is a Nigerian based, founded, and operated platform connecting people to hospitality businesses and entertainment experiences in Nigeria, and eventually, across Africa. Our platform will enable businesses and consumers to engage and transact in an interactive manner that drives convenience, efficiency, customer experience and revenue.

Our mobile and web app will make it easier for consumers to find and patronize restaurants, hotels, bars, clubs, events, and more.


Furthermore, we will provide businesses with the essential data and tools needed to increase brand visibility and revenue. We are passionate about using tech solutions and community development to better our country and continent. Starting anything in Nigeria is a challenge, but we believe that what we are creating is needed and will lead to many other possibilities and projects. As young and capable Nigerians, we hold ourselves accountable to use our diverse experiences and knowledge to create solutions that will drive positive change and growth. HighTable is one way we are putting Africa on the map as a hub of innovation.



THE INDUSTRY


HOTELS


KEY TRENDS


• Nigeria remains an attractive market for major hotel brands with a strong infrastructure for urban visitors.


• The MICE sector will drive guest nights and overall room revenue.


• The mid-scale market will present the best opportunities for growth.




Most of the new hotels will be in Lagos and Abuja as Nigeria has a strong urban infrastructure to accommodate the increase in rooms in those cities. Air traffic between Lagos and Abuja is one of the busiest routes in Africa and the Murtala Muhammed International Airport in Lagos is the fifth busiest in Africa serving more than eight million travellers annually.


Nigeria is primarily a business destination with the MICE (meetings, incentives, conferences and exhibitions) sector being the principal driver. The value of the naira has stabilised, the economy appears to have recovered from the decline in oil prices, and business activity is increasing.


With the country’s growing affluence, we expect consumer tourism to become a more important sector. Adventure tourism is becoming more popular and the growing interest in experiences is allowing Nigeria to attract visitors interested in the local culture.

We expect an emerging consumer tourism market to be centred on mid-scale hotels and serviced apartments.



THE ECONOMY


The Nigerian economy has experienced sharp up-and-down swings in recent years, reflecting large fluctuations in oil prices as the Nigerian economy is dominated by oil.

Real GDP declined in 2016, remained weak in 2017 and plunged by 13.4% in the first quarter of 2018. Since then, however, the economy has picked up, averaging 5.9% real growth during the final three quarters of the year. For 2018 as a whole, real GDP rose 1.9%, which was its strongest performance since 2015.


Economic forecasts are somewhat muted because of the volatility of oil prices. Another decline could quickly lead to a downturn in the economy. Even so, the projected 2.7% compound annual increase in real GDP over the next five years would be an improvement compared with the past few years.


Another positive development is a moderating inflation rate. Consumer price inflation spiked in 2016 and 2017, in large part reflecting a depreciating naira, whose value fell by a cumulative 45% against the US dollar between 2015 and 2017. The weaker naira led to rising import prices and higher overall inflation. In 2018, however, the value of the naira stabilised and inflation dipped to 12.1% from an average of more than 16% annually in 2016-17. While still high, the trend is in the right direction and we expect the inflation rate to continue to fall during the forecast period, averaging 8.5% compounded annually for the 2019-23 period as a whole.


Note: the effect of the COVID19 pandemic on the economy is not accounted for in this report.




RECENT DEVELOPMENTS


Guest nights rose 12.5% in 2018, the largest increase during the past six years as economic conditions improved and consumer inflation moderated.

The number of available rooms rose 2.1%, which was the smallest increase during the past six years as the uncertain economic climate in 2015-17 discouraged or delayed development.


PWC projected room capacity to accelerate beginning in 2019 with increases averaging 11% annually in 2020-21 based on current plans. For the forecast period as a whole, they estimated the number of available rooms to increase at a 7.6% compound annual rate to 14300 in 2023 from 9,900 in 2018, this exceeded other African countries analyzed in their report.


Here are some key analysis:





Guest nights rose 12.5% in 2018, the largest increase during the past six years as economic conditions improved and consumer inflation moderated.


The number of available rooms rose 2.1%, which was the smallest increase during the past six years as the uncertain economic climate in 2015-17 discouraged or delayed development.





Room revenue rose 20.0% in 2018, fuelled principally by an increase in guest nights. We expect growth in guest nights to remain the principal driver, but moderating growth in both guest nights and ADR will result in a slower, but still robust, 12.0% compound annual increase in room revenue.





Three- and four-star hotels


We have combined data for three- and four-star hotels in Nigeria. These hotels accounted for 46% of the total available rooms and 50% of guest nights in 2018. The average room rate was $140 in 2018, 6% higher than the overall average, reflecting the fact that there are relatively few five-star hotels in Nigeria. The average rate might drop due to the COVID-19 pandemic as a reactionary response to the temporary drop in demand.


We expect most of the growth in the overall hotel market to be generated by three- and four-star hotels over the next five years. The number of available rooms will increase at a 12.8% compound annual rate, accounting for 86% of the total increase in available rooms over the next five years. It is projected that the guest nights to rise by 13.6% compounded annually, generating virtually all of the growth in overall guest nights.


With a higher occupancy rate (53.6%) than the market as a whole, and with that rate edging up, we look for somewhat faster ADR growth than in the overall market.

The average room rate is projected to increase by 4.8% compounded annually to $188.

Three- and four-star hotels will generate an estimated 96% of the total projected growth in room revenue. Total room revenue will reach $320 million in 2023 from $134 million in 2018, a 19.0% gain compounded annually.




RESTAURANTS


There is very little data available on restaurants in Nigeria. This is one of the problems we plan to solve with our solution. The Association of Fast Food and Confectioners of Nigerian (AFFCON), an umbrella body of Quick Service Restaurants (QSR) has revealed that the Nigerian food industry is estimated to worth over a trillion Naira, with the Fast Food segment gulping over N250 billion, and this number is still expected to rise in the future. The QSRs have grown at an annual rate of 10% over the years.


Lagos, Nigeria has been nicknamed the restaurant headquarters of Africa with more than 2000 listed restaurants. Fine dining restaurants in Lagos have been on the rise with an estimated 10% increase in 2019 alone. However, QSRs are still the most popular types of restaurants visited by the middle-class which account for the large percentage of the Nigerian working class.


Insights on the Nigerian Quick Service Restaurant Customer 


To understand the lifestyle, behaviour and preferences of customers, a survey was conducted in Lagos, focusing on key areas on the Island and Mainland. With a fair representation of the different demographics, 100 randomly selected respondents were interviewed, providing valuable insights on factors that influence their decision to patronise fast-food restaurants. Of the total respondents, 55% were female and 45% male; most were between 18 and 34 years old; had at least a post-secondary education; and were in the consuming middle class (individuals with an annual income of more than $7,500). In addition, 46% of the respondents were married with an average family size of four, 50% were single and 4% divorced. Furthermore, 55% of the respondents were employed, 5% unemployed, 10% students and 30% were business owners. 





Analysis of the factors that influence respondents’ eating habits revealed that their lifestyle and increasing work rate are two of the major reasons why they eat out. Of the respondents interviewed, 92% work an average of 10 hours per weekday and about 70% of them eat out. Eating out refers to either eating at or buying food from a restaurant. Respondents considered visiting fast-food restaurants a stopgap for addressing their eating needs. This trend is expected to increase in the coming years as more people take on more challenging and demanding jobs.





OUR SOLUTIONS

Better Customer Experience

We have taken our own personal experiences, as well as other consumer experiences we gathered from our research, to think of all the things that HighTable needs to deliver. Our UI design will stand out as being more organized and sophisticated than other applications on the market. Once you create your profile, you'll be able to customize your in-app experience and recommendations based on your needs and wants. You'll be asked questions about your interests, budget, food allergies, etc, and the use of smart technology will craft a personalized experience for you.

Convenience & Efficiency

In Nigeria, there are many things that can stress you throughout the day, and we don't want HighTable to be one of them. In fact, HighTable can help make the lives of many consumers a bit easier. Under your profile, you'll be able to take the following actions:

-Order food (for pickup or delivery) -Reserve tables at restaurants, as well as clubs and lounges -Book hotel rooms at the lowest rates -Purchase tickets for big and small events/experiences (concerts, festivals, fashion shows, art exhibits, paint nights, etc.)

All of these transactions will be executed seamlessly and quickly. You'll also be able to pay using your virtual wallet and reward points, which alleviates the issue of a POS not working or an establishment not accepting international cards.

Social Networking

HighTable will be another way for you to connect with friends, make new ones and engage with some of your favourite hospitality and entertainment businesses. When you create your own profile, you can do the following:

-Upload quality photo and video content of your experiences (food photos from restaurants, photos/videos of you at events, etc.) -Share money and points with your network and split bills -Leave helpful reviews for others -Start group chats to make plans and more!

Imagine that it is Detty December and you're ready to have fun. Whether you're a local or an IJGB (meaning you've come for vacation), you'll be able to discover all the latest events and hottest places to go, as well as connect with people who share the same interests as you and meet up.

Marketing & Growth Tools for Businesses

With customers being able to transact quickly and seamlessly on the app, many hospitality and entertainment businesses will benefit from increased revenue. The more users on the app, the better. Furthermore, they'll be able to run targeted ads without layers of aggressive algorithms, which can lead to higher conversion rates. In addition to the app, we will offer businesses valuable tools, such as inventory management, queue management, detailed data & analytics, and more!

Businesses will be able to function better with informed data and smart tools that will make their end-to-end operations smoother and seamless.

Data & Analytics

Across all industries in Nigeria, and Africa in general, there is a lack of data. The HighTable app will collect essential consumer data that can be used by hospitality and entertainment businesses to make informed decisions and better meet the needs and wants of consumers. For the first time in Africa, we will be collecting real-time actionable consumer and industry data that will be available to stakeholders to grow the hospitality, food & beverage and tourism industry across Africa. This invariably will boost the GDP in Africa and catalyze the growth of the African continent.

Our App Prototypes





SUPPORT OUR CROWDFUNDING CAMPAIGN

Kickstarter is an international crowdfunding platform that helps bring creative projects to life. They help creators connect directly with their communities, putting power where it belongs. We have teamed up with them to create our first fundraising campaign!


We are excited to continue developing the vision, but as with any major project or business venture, we need some more capital to keep us going. Money raised will be allocated to continued research & development, software engineering, beta testing, labour, and branding & marketing.


Our goal is to raise $23,000 USD in 45 days. The campaign runs from May 25th to July 8th. Kickstarter uses an "all or nothing" approach, meaning if we don't hit our goal we receive NO money. We are confident we can reach our goal FASTER with your support.


$23,000



Kindly click on the KICKSTARTER link to pledge your donation.








References:


PwC Hotels Outlook: 2019–2023: South Africa - Nigeria - Mauritius - Kenya - Tanzania, www.pwc.co.za/outlook


National Bureau of Statistics


International Monetary Fund


Who Is Your Next Customer? Strategies for targeting potential consumers in foreign markets, Strategy + Business, http://www.strategy-business.com/article/07313?pg=all (accessed on 20th June, 2014)

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