Business

Short-stay apartments record boom, amid COVID-19 second wave fears

2020 has been a devastating year for the Nigerian economy, especially the hospitality industry, with hundreds of people laid-off and salaries of some workers slashed.

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Covid-19

Interestingly, as the big-wigs in the industry continue to grapple with the economic impact of the Covid-19 pandemic on their patronage, smaller boutique hotels (short stay apartments) are witnessing a boom during the Yuletide season.

While the average price of 1-bedroom flat short-let in Lagos is N35,000 per day, the most expensive flat costs N80,000 per day.

Their location, especially in Lagos is also an attraction to their patrons, with range of choices from Ikeja, the state capital; high-class areas like Magodo; Chevron Drive, Lekki Phase 1; Oniru, Victoria Island; to Surulere areas of the nation’s commercial hub.

Expensive but safer, flexible and functional – Patrons

Akinwole Adekoya, who is based in Qatar, United Arab Emirate (UAE), is one of the patrons of the short-let apartments in Lagos.

According to him, he usually visits his family every Yuletide season but had to stay at one of the apartments close to Lagoon School, Lekki Phase 1, where he pays N80,000 per day.

Before he chose the apartment, he told Nairametrics that he saw an apartment where he was asked to pay N450,000 per calendar month off Marwa within the same area, which he rejected.

“Though, some people may think it’s expensive but I prefer it because it is safer compared to the conventional hotels, where you don’t know the Covid-19 status of people around you.

“I decided to stay at the apartment because I needed to isolate myself for about two weeks in order to keep my family safe. The room is just like home-from-home experience, as I have everything to myself including the kitchen. 

“Even before COVID-19, I use them whenever I go to Abuja, largely because of their privacy feature. While cheaper hotels are accessible, I prefer the apartments due to their home away from home feel.”

Abuja based Engineer who craved anonymity, prefer the apartments around Oniru, VI; and Magodo Phase II, anytime he is in Lagos because of special features like privacy, functionality, flexibility, and comfort of a high-end home, along with the efficiency of hotel services.

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“Some of them have increased their rates to stay in business, especially during the pandemic. The last time I came to Lagos for four days, I first checked an apartment on Airport Road, which had gone up from N20,000 to N30,000.

“I finally chose one at Magodo Phase II, which had also increased from N15,000 to N20,000. That is because of the serenity of the environment and the incentives they offered. They dry cleaned my clothes for three days free of charge and I have decided to use the facility anytime I am in Lagos.”

These patrons are only two out of hundreds of Nigerians that preferred the services of the short-let apartment due to the flexibility, amongst other functionalities.

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Revenue is steady, ticking up and good investors

Olajide Abiola, Co-founder and CEO, Smart Residences Ltd, operating as Gidanka, told Nairametrics that despite the COVID-19 pandemic, the revenue generated from the apartments has been steady because of the excellent service reputation earned within the short period.

According to him, Gidanka has facilities across four neighborhoods in Abuja cityspace, Lagos and still counting.

He said, “There has been steady uptake and about 30% to 70% month-on-month growth since January 2020, when an additional 28 space units were added. The revenue is steady, ticking up and good.

“Revenues are made from nightly, weekly, and monthly room rates. We will be cash flow positive before the 4th quarter of 2020, even in the face of COVID-19. Out of the debt raised, 65% has been offset within seven months, which is five months ahead of the moratorium.”

On the source of fund, he told Nairametrics that his company secured N1.07 billion in seed funding, and have been able to lease out properties in four neighborhoods, to provide 86 unique spaces in about a year.

“We have hosted travelers from over 12 countries, and have paid over 70% of the loan. Interestingly, in the face of the COVID-19 pandemic, our spaces have seen steady patronage because of the excellent service reputation earned within the short period.”

Another investor in the industry, Lekan Okueyungbo, who owns apartments in Maryland and manages another in Lekki (Chevron axis) for a friend, explained that traditional hotels with their limited spaces birthed the increasing demand for the services of the short-stay apartments.

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He said, “This is an emerging industry across major commercial cities in Nigeria because the investors ensure the apartments are positioned in new and fascinating locations.

“From my observations, the demand for our services increased especially during COVID-19 pandemic/lockdown. About three of my friends that said the business is not lucrative pre-COVID called me and asked if I could help manage or consult for them.

“Most of our rooms are fully booked sometimes for days. Sometimes, customers book a day or two ahead just to be assured of a room whenever they need one.”

What you should know

  • Last September, Nairametrics reported that the rise of the short-stay apartments and boutique hotels also points to their profitable business models and financial viability.
  • An operator in a hotel located on Victoria Island informed Nairametrics that apart from the initial one-month lockdown in April 2020, occupancy rates have picked up to pre-pandemic levels.
  • In another hotel in Lekki, the owner told Nairametrics that his major challenge was not having enough rooms. “I wish I could purchase the adjacent building and expand my operations. I lose money I would have easily earned because I have to refer my customers to other hotels,” he remarked.
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