In the wake of the gradual return to life and resumption of business activities following the COVID-19 inspired lockdown globally to contain the spread of the deadly disease, Lagos based firms has predicted a spike in the real estate, hospitality, and tourism sector. This is just as more people are expected to seek the desired trip away from home to their choice holiday destinations or even a short break away from home having spent the large part of the previous year working remotely.
While hotels have taken a beating in bookings as a result of the COVID-19 pandemic and global lockdown, short let homes and apartment bookings have soared with the number of bookings continuing to rise as we return to normalcy.
According to a report by Market Watch, the short-term rentals market has grown significantly during the last few years, and it is expected to grow at a rapid pace in the next five years with the occupancy rate projected to be at 70% in 2021.
The increase in short let homes adoption is in close relation to the growth in the tourism industry as travelers have widely adopted short-term rentals, such as the vacation homes and other booking channels, resulting in one of the hottest arms of the sharing economy. In fact, short-term rentals yielded 30% more profits for homeowners/investors than long-term leases, with an estimated global market valuation of $169 billion in 2018 alone.
With a growing urban and middle-class city comes a need for recreational centres, tourist accommodation and activities. According to African Futures Papers, by 2035, close to 30 million people could live in Lagos, turning Nigeria’s commercial hub into the largest megacity on the continent. At the same time, more than a third of Africa’s urban population is expected to live in West Africa. Nigeria’s Lagos city is estimated to become one of the fastest-growing cities in the next twelve years with Lagos becoming a megacity by 2030.
Digitalization
is leading the charge to drive short let homes utilization and investment,
according to reports Chief Executive Officer of most firms said digitization
and the huge cost of hotel rentals have created a huge opportunity for short
let homes to thrive. “Why on earth have we been paying high prices for hotel
rooms when we could pay less for a whole apartment within the same prime
location and with close proximity to the best bars, restaurants, shopping
centres and beaches,” from report.
Today, Lagos Island is experiencing a real estate boom driven by high yield rental income from short let opportunities. This can be seen as both a threat and an opportunity for the hospitality industry. The prospect of its continued expansion is clearly a timely warning to hotels offering rooms at the same rates that consumers can use to get a whole apartment and, in some cases, much lower.
Some of the reporters who disclosed that company’s average booking duration increased by 350% for group bookings from 4 days to 14 days and an average of 7 days for single bookings, which is a 230% increase from a previous average of 2 days per booking, stressed that the hospitality and tourism industry is evolving to meet the needs of the yearning end users.
Hotels can choose to evolve or compete, however with digitization, automation and artificial intelligence, digitally focused start-ups within the short-let rental market can create a terrifying monster for large and small hotel chains just by using technology to deliver on the go instant bookings, convenience, comfort and the use of virtual booking agents to replace human agents,” they said.
With over
80% of Nigeria’s population having internet access via their mobile devices
according to a 2021 digital report by We Are Social, the country is
well-positioned to benefit from the global digital opportunities. This also
affords more online rental platforms to provide an opportunity to capture
demand for domestic and international bookings where affordability and luxury
go hand in hand.
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