This article written as a FAQ page is a miniature version of
a standard business plan for a bed and breakfast hotel in Nigeria. In this
article we will explore together the existing and potential opportunities for
this business and potential challenges are explored as well. The fact that
customer needs are changing and the use of internet marketing platforms like Air
B ‘n’ B also creates a brand new industry which makes entry requirements for
operators a lot less strident. The first year financial sample projection is
also covered including potential return on investment.
Introduction
A bed and breakfast hotel is usually a high budget service
combining the high-end services of a 5 star hotel with upscale residential
premises that provides a very enriching hospitality option than conventional
hotels for mostly business travelers or tourists who are on short stay within a
particular city. Due to their importance in providing luxury and customized accommodation
and home away from home housing experience for travelers on the move, they play
a key role in promoting the local tourism industry while also creating new business
opportunities for property owners.
In this type of hotel service, the owners of the property
provide hospitality to their guests and the service is very similar to guest
houses/inns and some of them can rightly be classified as serviced apartments
as well. People who own decent residential buildings and have a background in
hospitality service can tap into this business by registering their apartment
as a B and B hotel with local hospitality regulator while also signing up with online
hotel booking services.
Market Opportunities
for Bed and Breakfast Hotels in Nigeria
People who make use of bed and breakfast hotel service
usually want to avoid the nasty experiences of using normal hotels. For instance
most Nigerian hotels are too profit oriented providing services that they
believe are more lucrative and in higher demand e.g night club, hall rental etc
without giving consideration for the hospitality needs of their guests who may
be visitors on business trips and need minimal distractions. Most hoteliers are
also not in tune with budgetary needs of guests.
Their standard rates do not really consider providing the supporting
amenities that a guest might need so let’s say I love to exercise but love an exclusive
environment, the hotelier may provide the gym but fail to make his hotel
exclusive for its guests. This is where B and B hotels usually get it right. They
give the guest the best of both worlds.
Then there is the digital marketing revolution and growing
popularity of Air B n B and other online booking services as a global marketing
service for B n B hotels means these businesses can operate inexpensively if
they can provide ideal amenities, good reputation that international guests are
looking for, thus gaining much exposure and leverage to compete with much
bigger hotels.
- Very affordable option compared to 4 and 5 start hotels. B and B hotels are very affordable due their lower operating costs than conventional hotels
- Huge demand for home away from home experience for travelers especially with the business travel segment and families on the move
- These hotels can also provide residential experience for guests intending on extended stay (weeks or months instead of days)
- Conventional Hotels have limited guests vetting compared to B and B hotels
- Since most hotels in Nigeria do not provide adequate hospitality amenities for guests but are more expensive, then naturally B and B hotels provide more value for money
Challenges
for Bed and Breakfast Hotels in Nigeria
- Property management. Intending operators must meet regulatory standards for managing their property to world class standards which can be a challenge for operators who are not acquainted with real estate management
- Security. Providers of
bed and breakfast services have to struggle with providing adequate security
for international guests
- Professionalism challenges - employing staff
- Licensing and standards requirements
Why is Bed
and Breakfast Hotels are a better choice for many?
They are more convenient to most guests compared to hotels
because of greater privacy and easier access to additional services such as;
hotel pickup and airport shuttle service, emergency concierge services and of
course complimentary breakfast. This type of hotels tends to offer greater
value for money for the room service and a more family oriented service. Besides
this,
What is
required to Setup a Bed and Breakfast Hotel in Nigeria?
Any multipurpose property registered and complying with town
planning regulation and insurance requirements for guests can be registered as
a B and B hotel. It must be professionally run and managed to meet minimum
standards for general hospitality, safety and security measures in place e.g
risk management against fire, accidents and security breaches among others. It
must provide adequate entertainment services such as; satellite services,
concierge, food and drinks and other compliance with environmental regulations.
Who are the
main customers?
The list includes; international journalists from major
global media houses, foreign investors on business trips with local partners
and government officials. International traders sourcing raw materials from
local sources in Nigeria, diplomats, consultants and technical experts,
academicians and missionary workers to name a few. They are coming from their
overseas bases with expectations and standards in mind.
What are
the benefits to investors?
This can serve as a steady income stream for real estate
investors. The very nature of B and B hotels makes them very cost effective and
profitable because in comparison to standard hotels they have lower operating
costs but have the potential of generating just as much revenue. The property
values of these assets also get major international exposure to foreign
technical partners and even investors. So this investment can provide good
short term cash flow from mostly foreign guests, build equity and appreciate in
value overtime.
What are
the growth potentials for B and B Hotels in Nigeria?
These hotels have the ability to generate massive incomes on
low marketing budgets which offer self-growth opportunities for the owners to
explore other ventures without bank loans. In addition to this the ever growing
use of internet marketing means parts of the market which was only accessible
to travel agents can now reach out directly to their choice hotels without
agency fees. That means increased future revenue opportunities although
operators still have to contend with competitors.
What are
ideal places to locate a Bed and Breakfast Hotel in Nigeria?
In Nigeria the two biggest commercial cities are automatic
candidates namely; Lagos and Abuja although other major cities that attract a
lot of international visitors such as Port Harcourt and Warri. Places that
feature prominently on international travel warnings are not suitable locations
– cities and towns with high crime rates, kidnappings and political
instability.
How much is
required to setup a Bed and Breakfast Hotel in Nigeria?
The amount required starts realistically from 180 million
naira for a luxury 10 room standard Bed and Breakfast facility within an
exclusive suburb of Lagos or Abuja. The facility should have adequate car
parking space, security, entertainment and recreational amenities, proximity (30
minutes maximum) from the airport and standby generator.
First year Financial
Projections
Assuming occupancy rate of 75% is maintained year round for a
10 room facility with an average of 18,000 naira per night going rate for 360
days in a year with 75% total running costs on gross revenue realized within
that period, first year sales should be 129,600,000 naira while profit after
tax should be at least 32,400,000 which is 18% ROI with payback period of 6
years. By all standards this is a lucrative business even though these figures
are conservative.
Are you interested in
setting up a bed and breakfast hotel in Nigeria and need a bankable business
plan written for you? Give me a call: 0803 206 4106 or email me on: paulonwueme@gmail.com to have one prepared for you.
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