The Lagos hospitality sector continues to outperform market expectations

Bisi Adedun . 2 years ago

2024 lagos real estate report

black diamond hotel

delborough lagos

lagos hospitality market

lagos real estate

lagos real estate report

Nigeria Real Estate

The Lagos hospitality sector continues to outperform market expectations

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Article Summary: The Lagos hospitality market continues to perform well, driven by business and leisure activities, with a 34.96% year-on-year increase in Average Daily Rates (ADR) in 2023. This growth has made it an attractive investment opportunity, despite a low supply of new hotels entering the market this year due to macroeconomic headwinds.

The Lagos hospitality market continues to exhibit healthy performance in terms of RevPAR and Average Daily Rates driven by business and leisure activities in Nigeria’s economic powerhouse. Notably, during a turbulent macroeconomic year, ADR grew by 34.96% YoY in 2023. As such, it remains an enticing market for hospitality investors as the most prominent market in Sub-Saharan Africa in terms of pipeline volume.

Breakdown of Lagos Hospitality Pipeline. Source: Estate Intel

Despite having one of the highest pipeline percentages in 2023, we saw few hotel completions last year at 374 keys (Black Diamond Hotel and Delborough Lagos). This year, a supply of 826 keys is expected to be delivered according to data from W Hospitality Group. However, existing macroeconomic headwinds are likely to inhibit the delivery of new stock into the market.

Lagos' Expected Stock Supply by Year. Source: W Hospitality Group — Lagos’ Expected Stock Supply by Year. Source: W Hospitality Group

Trevor Ward of W Hospitality Group notes that “the recovery and resilience of the Lagos hotel market is remarkable, it has outperformed most of the other cities globally, in terms of both demand and pricing. By the end of 2022, both ADR and RevPAR had surpassed pre-pandemic market performance.
Increased demand, and very little additional supply, have resulted in pricing power on behalf of hotel managers, with no great resistance from the market, as increasing prices across the board are a fact of life. 2023 ADR was about 35 per cent above the 2022 figure, well above inflation; at 2019 values the 2023 ADR is approximately 8 per cent higher than that achieved in 2019. We have not previously seen real increases in the ADR for over a decade. Looking forward, 2024 and 2025 promise to bring continued strong performance, with hardly any new hotels due to open.”

Download the 2024 Lagos Real Estate Development Pipeline Report for more insight into the performance of the Lagos hospitality market in the past year.

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