Nigeria’s hospitality sector needs infrastructure for growth

Nigeria’s hospitality industry has long been described as one of the nation’s most resilient economic sectors. Through recessions, exchange rate volatility, inflationary pressures, insecurity and even global disruptions such as the Covid-19 pandemic, hotels, restaurants and tourism operators have continued to adapt and survive. The verdict from the 2026 BusinessDay Tourism Conference that the hospitality sector is now investment-ready therefore comes as both a recognition of years of resilience and a call for deliberate action.

Over the past 15 years, Lagos alone has witnessed expansion in hospitality infrastructure. The number of registered hotels has increased significantly, room capacity has almost doubled, and internationally branded hotels have multiplied, while government revenue from hospitality-related consumption taxes has reportedly risen from about N7 billion in 2010 to N70 billion in 2025. Such figures demonstrate that hospitality is no longer merely a support service for tourism but has become a viable investment destination capable of generating employment, taxes and foreign exchange.

 “Lagos provides a useful example, as investments in transportation infrastructure such as the Blue and Red Rail Lines have improved urban mobility, making hotels and tourism sites more accessible.”

But what exactly makes the sector investment-ready, and how will increased investment work for the economy?

Hospitality investment is far more than constructing luxury hotels, as it encompasses hotels, resorts, serviced apartments, restaurants, convention centres, event venues, ecotourism facilities, entertainment parks and supporting infrastructure. Investors provide capital to build or upgrade these facilities, while hotel operators, often global or indigenous brands, manage daily operations under established standards.

As new hotels open, the benefits spread across multiple sectors. Construction companies secure contracts, local manufacturers supply furniture and fittings, farmers provide food, transport operators move guests, and technology firms deploy booking systems, while thousands of Nigerians find employment as chefs, receptionists, accountants, security personnel, tour guides, cleaners and managers.

The multiplier effect is substantial because a thriving hospitality industry also enhances tourism. Quality accommodation encourages business travellers, conference organisers, leisure tourists and international investors to stay longer and spend more. Cities with strong hospitality infrastructure become attractive venues for exhibitions, sporting events, cultural festivals and international meetings, all of which generate additional economic activity.

Lagos provides a useful example, as investments in transportation infrastructure such as the Blue and Red Rail Lines have improved urban mobility, making hotels and tourism sites more accessible. The state’s harmonisation of taxes and levies has equally reduced regulatory uncertainty, giving investors greater confidence to commit long-term capital.

This is precisely how an enabling environment should function. The government builds the ecosystem, and the private sector drives commercial growth.

However, declaring the sector investment-ready should not obscure the challenges that continue to discourage investors.

Infrastructure remains the industry’s biggest obstacle. Hotels still spend enormous sums generating their own electricity because of unreliable power supply. Poor road networks outside major cities, inadequate water systems and weak waste management significantly increase operating costs. Every naira spent on diesel, water treatment or security is money that could have been invested in expansion or service improvement.

Tourism flourishes where visitors feel safe. Nigeria’s hospitality sector cannot fully realise its potential while concerns about kidnapping, violent crime and communal conflicts continue to influence travel decisions, especially among international tourists.

Hotel development requires significant long-term capital, yet borrowing costs in Nigeria remain among the highest in emerging markets. Without cheaper financing, many indigenous investors struggle to expand despite strong demand.

There is also the risk of concentrating development in a few urban centres. Lagos, Abuja and Port Harcourt continue to dominate hospitality investments, while states endowed with rich cultural heritage, wildlife reserves, beaches, mountains and historical sites remain largely underdeveloped. A truly investment-ready hospitality sector should stimulate balanced regional development rather than deepen geographical inequality.

Still, hotel expansion without corresponding demand could create oversupply in some markets. This would reduce occupancy rates, compress profit margins and weaken returns on investment. Market research and data-driven planning must therefore guide future developments rather than speculative construction.

The way forward is clear. The government must continue investing in transport infrastructure, stable electricity, broadband connectivity, security and destination marketing. Simplifying licensing procedures, maintaining predictable tax policies and strengthening public-private partnerships will further improve investor confidence.

The message from the BusinessDay Tourism Conference is therefore timely. Nigeria’s hospitality sector has demonstrated resilience and possesses enormous investment potential. Yet, investment readiness is not a destination but a continuous process of improving infrastructure, strengthening institutions, enhancing security and maintaining investor confidence.