…Says firm fully back, stable and ready to occupy her prime position
By Chris Onuoha
Theophilus Eniola Netufo is the Chief Operating Officer (COO), Ikeja Hotels Plc. In this interview, Netufo speaks on how government can revamp the tourism industry, among other things. Excerpts:
Tourism and hospitality industry is not booming as much as it should be in the country despite efforts by private companies like Ikeja Hotels Plc and others that strive to give it a facelift. This sector is known to contribute large chunk of Gross Domestic Product (GDP) of some countries. What is the cause of the problem and how do you think things can get better?
Ikeja Hotel PLC is unarguably the prime promoter and driver of tourism business in Nigeria. The company sponsored many local and international conferences on tourism some years back. This was achieved through the formation of Federation of Tourism Association of Nigeria (FTAN) which was aimed at bringing together all tourism practitioners in Nigeria under one umbrella primarily to promote tourism and to make it a preferred sector to oil industry.
The body engaged with all levels of government to bring their attention to tourism sector earnings’ prospect. But as of today, the Federal Government is not doing enough in promoting tourism. Tourism Ministry is now merged with Information and Culture Ministry thereby undermining full focus on tourism as a sector that requires sectoral allocation and development.
The sector is finally given a technical knock-down by the spate of insecurity, wanton killings, activities of ethnic militias, cult activities, hoodlums at tourist sites, terrible inter-state roads and poor infrastructures in Nigeria. Nobody can promote tourism under such decay. There is very little private companies can achieve in tourism if government continues to fail in her role to provide basic infrastructures to make business thrive.
If you look at some countries with less mineral resources, tourism helps their economies. This is the direction we should go as a nation. Look at what tourism is doing in Dubai, Israel, even Rwanda at our backyard here. Our government and political leaders need to put on their thinking cap to save this nation and future generations. Policies that will absolutely favour tourism should be promulgated and implemented without delay.
How best do you think government can engage its machinery to quicken the development of tourism sector in the country?
The primary role of government in promoting tourism development is to provide basic social and economic infrastructures. Apart from that, government should focus on rebranding and improving the battered image of Nigeria in the international community by engaging more on cultural exchange programmes with other countries. Secondly, government should establish tourism bank, like the existing Bank of Industry (BOI) which should serve as long-term fund with low interest rates to support the industry.
Ikeja Hotel Plc has moved in leaps and bounds since inception. Could you give us an overview of its success story?
The company evolved from Property Development Company (PDC), registered on November 18, 1972 to Ikeja Hotels Limited (IHL) in 1980. It was repositioned to build a hospitality edifice with a view to providing world-class hotel and catering services, maintain a leadership position in the provision of first class international hotel development and management services in the hospitality and tourism industry in the country and beyond.
IHL, basically an investment company, became a public company in 1983 and, in September 1985, debuts Sheraton Lagos Hotel that dominated the hospitality space. It took a giant stride in asserting its leadership role in this sector by acquiring the Federal Palace Hotel owned by Tourist Company of Nigeria (TCN) in 1992 and later acquired 51% of Capital Hotels Plc, owner of Sheraton Hotels, Abuja. Since then, the company has been growing in leaps and bounds.
Having come this far, how did the company wade through its stormy days including legacy issues?
Of course, there were plethora of challenges then, even now; the challenges stemming from business and political environments are vociferous, but the company, through strategic direction, informed business decisions and optimal risks management capabilities, has been able to overcome the various challenges emanating from internal environment. Also, management strategic focus and ability to adapt to changes in technology and other related uncontrollable factors sustained the business even during difficult times. On legacy issues, the intervention of Securities and Exchange Commission (SEC) brought peace, stability and progress to the company.
The company’s 2018 Annual Report indicates that there is an increase in overall business outlook in the year past, and the year 2019 is winding up. How can you describe the year in anticipation?
Since May 2017 when the new Board was inaugurated, the fortunes of the company have soared. The achievements of Year 2018 are an impetus for us to do better in the current year. Though the Year 2019 commenced with national elections with fears and apprehensions about the conduct and outcome, the matter was made worse when the elections were postponed. There were security concerns in the country. This kept many travellers, investors and guests away from the country in the first and second quarters of the year. Also, the spate of insecurity ravaging the country like herdsmen killings, kidnappings and other insurgencies had a negative effect on the demand for hotel facilities. Bookings for international events were cancelled. All these will inadvertently affect the performance of the company in the year under reference.
Ikeja Hotels presented a ‘Facts Behind The Figures’ slide show at the Nigeria Stock Exchange in June, signifying another milestone. Can you explain more on the outcome and the subsequent awards bagged by the company?
The ‘Facts Behind the Figures’ provided the opportunity for the company to inform the investing public through the stock market that the company is fully back, stable and ready to occupy her prime position as a flagship of hospitality business in Nigeria. It also served as an opportunity to showcase the potentials of the company as investors’ bride. The immediate outcome is that investors’ confidence is restored and this resulted in active trading in the company’s shares. The company also won the Pearl Award for Year 2019 Sectoral Leadership as another outcome of the ‘Facts Behind the Figures’ event.
For the two awards, ‘Highest Dividend Award’ and ‘Sectoral Leadership Award’, it was really a collective effort of all stakeholders, including regulatory agencies who assisted to mid-wife peace, corporate governance and sound business practices, and this made the company to shine and this impacted the bottom-line. The company will continue to do business with extra hard-work and also to ensure maximum compliance with all statutory requirements.
But at some point, shareholders were apprehensive over unstable financial situation of the company. Did that in anyway results to share membership pull out?
Hotel business is a long-term investment, so payment of dividend may not come immediately. Even when dividends are paid, conscious effort must be made to plough back substantial earnings into reserves for future renovation and upgrade of hotel facilities which are vulnerable to wear and tear as a result of usage. Investors in hotel asset must understand this fact and on the long run, they will still benefit from the performance of the asset.
In the case of Ikeja Hotels Plc, there was no shareholders pull-out because of problem with dividend. As a publicly listed company, the stock market provides the window where the shares of the company are freely traded. However, when the shareholders were getting apprehensive, the intervention of Securities and Exchange Commission in setting up a new Board to direct the affairs of the company restored the confidence of all stakeholders.
With the seeming competitiveness in the hotel industry, does that portend danger for the company’s leadership position?
Not at all! We are number one in the industry. We have been around for over three decades, still waxing stronger. The advantages we have over the new entrants are enormous and cannot be easily wished away. Hospitality is not about the size of the asset or the state of the art of the facilities, it is more importantly about service. This is where we derive our motto: ‘Service par Excellence’. Service is our prime heritage in all our operations.
With the right technology, knowledge of the industry, experience, our human resource capabilities, we will remain number one for many years to come.
Our major agenda now will be to upgrade our assets, reposition the hospitality business in Nigeria with technology-driven service-delivery and to raise the bar of human capital development for the Industry in Nigeria.
It appears that the company has lost interest in developing tourist sites, beaches and resorts in the country. Is it deliberate?
Ikeja Hotels Plc is a pioneer in this area. The company entered into a Joint Venture with a private developer to acquire an Island around Ilashe Beach under Amuwo Odofin Local Government Area over two decades ago to build tourism sites for both local and international visitors. Many foreign visitors, potential investors from many countries of the world visited the site at one time or the other. The plan then was to provide air shuttle services from Mile Two Beach, Lagos to the site.
The company, in partnership with Lagos State government, also acquired the Opebi Gorge for tourism development. The company, at various times, collaborated with many state governments, especially Cross River, Kogi, Benue, Borno, Delta, to mention just a few, to develop tourism sites in those states. But the challenges the company went through, undermined the success of these efforts. In no distant future, the company will go to the drawing board again to re-jig some of these efforts.