There is beginning to be a shift in focus from the development of luxury hotels to the development of hotels that are accessible to the middle class in Nigeria. According the director of OECD development centre, the increase in average incomes and the fall in levels of absolute poverty, in particular during the last decade, suggest that an increasing proportion of the world’s population is neither rich nor poor by international standards but finds itself in the middle of the income distribution. This has given rise to the idea of developing economy hotels in order to take advantage of this growing class. OECD statistics shows that the size of the global middle class is said to increase from 1.8 billion in 2009 to 3.2 billion by 2020, and 4.9 billion by 2030. The revenue to be generated is far more than what is obtainable from the upper class.
The developing world’s emerging middle class is a critical economic and social actor because of its potential as an engine of growth, as seen in the largest developing countries such as China, India, and some sub-Saharan parts of Africa. Thus, developing the middle class is the focus of the government of most developing nations like Nigeria; the more reason why hotels should begin to shift their focus to them.
In 2015, the global middle class numbered about 3 billion people who spent $33 trillion, amounting to two-thirds of the world’s consumer spending. By 2021, most people could be middle class. Hoteliers in Nigeria must begin to think of where their hotel’s customer base will come from in the future.
However there are some that proposed that hoteliers should stay out of the middle class. According to Jack DeBoer, a hotel industry icon, the reason for this is that “The middle is a commodity and it will be driven not by what you can do or what you can change, but it will be driven by the economy, over which you have no control.”
Nonetheless, as the global tourism landscape continues to change, so should the hospitality industry. The rising number of middle-class travelers, business travelers and travelling families has led to a boom in the number of economy hotels in the world, also known as select service hotels. The focus for Nigerian Hoteliers should therefore be the offering of select services, meaning it should not just be a full service hotel. A four or five star hotel like Eko Hotel and Suites, Lagos Oriental Hotel, and Protea Hotel Kuramo Waters will usually have a wide range of service offerings such as various restaurants, a ballroom, gift shops etc. With economy hotels or select service hotels, you need to focus on giving people what they want from their accommodation and not necessarily adding in all the jingles and sparkles. The things that guests typically want are a comfortable bed, a hotel in a good location, high-speed and free WiFi, in-room technology that works seamlessly and a lobby/breakfast area where guests can socialize with people and hang out. The hotels are often located in vibrant parts of cities where the guests can choose from a wide choice of local restaurants and bars within a short and safe walk from the hotel. Many economy hotel that are taking advantage of this growing middle class include Beni Apartments, Travel House Lekki, Axari hotels and De-Skyline Hotels.
According to hotels.ng, the current demand for economy hotels/select service hotels is increasing at a faster rate than the demand for four or five star hotels like Hotel Ibis Lagos and Westwood Hotel. In Nigeria, the middle class accounts for about 23% of the population according to the African Development Bank (AFDB) data, with the majority living in urban areas. This segment of the population is responsible for a huge proportion of the increased spending on consumer goods, therefore improving the state of the economy. The growth in middle class in Nigeria follows the rise in the country’s Gross Domestic Product (GDP), which increased, five times from $46 billion in 2000 to $247 billion in 2011, while GDP per capita has increased to about $1,600 and higher in 2016. Similarly, the country’s population has increased by about 42% during the same period rising from 119 million to the current estimated 170 million. The question then becomes, are Nigeria hoteliers ready to take advantage of this growing middle class.