As the hospitality sector enters the last few weeks of the COVID-19 semi-lockdown in Lagos State with many hotels preparing to reopen their doors to the public once again, a new study has revealed that hotels in the state incurred N20bn revenue losses in three months.
Using Smith Travel Research, STR data of Average Daily Rate, ADR and occupancy of Lagos hotels from 2009 to the last “normal” month (February 2020), and information from 196 Lagos hotels (9,682 rooms), it is estimated that the revenue and associated tax losses for the three months of March to May 2020 is about $56m or N20bn. Total rooms revenue loss is estimated at N13.04bn, other revenue loss stood at N7.02bn totaling a whopping N20.06bn.
ADR is a statistical unit that is often used in the lodging industry. The number represents the average rental income per paid occupied room in a given time.
It is not only the hotels that suffered losses, but the lockdown period also cost both state and federal government about N2.50b or $7m in revenue related taxes.
This is aside payroll taxes, Value Added Tax, VAT on purchases by the hotel for food, drink, and other items, and the indirect spending by staff and others.
Recall that the tourism sector has been one of the most hit by the COVID 19 pandemic with a global estimated revenue loss running into $1.2 trillion.