Rising Power Costs Threaten Nigeria's Hotel Industry

The CEO of Panama Hotel expressed that the increasing costs of power, particularly diesel, pose the greatest threat to hotel businesses in Nigeria. He noted that input costs are rising rapidly while customers lack the purchasing power to pay for higher services.

Diesel expenses constitute 50% of the hotel's overall costs, and the CEO highlighted that the price of essential equipment has doubled since the hotel's inception two years ago. For example, air conditioners that initially cost N300,000 are now priced at N500,000.

The hotel struggles to maintain quality service at low costs, as many customers opt for cheaper rooms priced at N30,000, leaving more expensive options vacant. The CEO also pointed out that the unstable electricity supply forces hotels to rely heavily on diesel generators, which are costly to operate and maintain.

He emphasized that many hotels are shutting down due to these financial pressures, and borrowing from banks is challenging due to high-interest rates.