PROBLEMS FACING SMALL SCALE HOTEL IN NIGERIA

PROBLEMS FACING SCALE HOTELS IN NIGERIA

CHAPTER ONE

INTRODUCTION

• Background of the Study

In recent times, small and medium scale business has been a major source of revenue for most urban dwellers in Nigerian cities. World Tourism Organization (2016) has pointed out that hotels are now regarded as one of the best monuments in developed and developing countries of the world. First-class hotels in Abuja, Lagos, Port-Harcourt, Calabar, Kano, Kaduna, etc now rank among the best tourist attractions in Africa. This is evidence that hotels and recreational centers serve as tourism centers through the provision of tourism facilities in most Nigerian Cities (Fred, 2017). Awaritefe (2004) opined that environmental perception is one of the psychological processes that occur as a result of the interaction of humans with their environment. Awaritefe (2003) emphasizes the significance of positive perceptions by consumers in their selection of holiday resorts. This implies that small-scale hotels play a significant role in the development of Lagos. Small-scale business such as hotels and recreational centers is necessary as it is imperative to incorporate new business idea in the form of entrepreneurship in business which will equip tourists to meet the socio-economic requirement of the world of work. It will empower the young youths and provide jobs for the timid unemployed youths in Nigeria (Evans, 2016). Through small-scale businesses, they can explore the business and economic opportunities around them to become self-employed and create jobs for other people.

Small and medium-scale enterprises have long been recognized as an instrument of economic growth and development in Nigeria. This growing recognition has led to the commitment of the World Bank Group to Small scale hotels sector, as a core element in its strategy, to foster economic growth, employment, and poverty alleviation. The World Bank Group in 2004 approved roughly $2.4 billion in support of Micro, Small, and Medium Enterprises (World Bank, 2001). The Small scale hotels have been given due recognition, especially in the developed nations for playing very important roles in fostering accelerated economic growth, development, and stability within several economies. Several types of research have been conducted on the prospect and challenges of scale hotels in Nigeria and abroad as Small- and medium-sized enterprises (Small scale hotels) have long been believed to be important in supporting economic development within a country (see Akhtar& CDASED, 1999; Mazzarol, Volery, Doss, and Thein, 1999; Al-Shaikh, 1998) while others such as Chukwuemeka (2006), Agwu and Emeti, (2004), Arinaitwe (2006), Lundström (2005), Oboh (2002), Okpara (2000), Wale-Awe (2000), Ihyembe (2000), Bruch and Hiemenz (1984), Binks and Ennew (1996), Baumbach (1983); and a host of others have observed various factors or challenges that impedes the performance of Small scale hotels ranging from inadequate finance, poor infrastructural facilities, inadequate managerial skill, weak and instability of government policies and other presumed factors and challenges causing premature death of Small scale hotels as Beckman (1983) classified the problems as internal and external. Many studies have looked at the respective factors that are germane to the success of Small scale hotels. Teoh and Chong (2008), and Ding and Li (2010) argued about that lack of access to credit and managerial skills are the major obstacles to entrepreneurship development and that in a knowledge-based economy, intellectual capital is gradually replacing the physical assets in modern enterprises. In the seminal work of Aschauer (1989), he finds that the provision of public infrastructure is a significant determinant of the aggregate productivity of scale hotels. Pointing to these different findings, it appears that empirical studies on the prospects and challenges of scale hotels are still largely inconclusive as the direction in which these factors serve as prospects for scale hotels and those which are challenges have not been properly identified. In tandem with the objective thrust of this study, none of these studies has observed the ranking of these challenges in order of their importance or the priorities on the scale hotels. The authors only argued on the presumed factors that affect Small-scale hotels, which is why this study intends to look at factors that have the highest priorities or ranking order of importance using a principal component of factor analysis; which is the gap existing in empirical works. Apart from this introductory section, the remaining aspect of this study is divided into four other sections.

This approach requires a shift from traditional small-scale businesses to active participation in a real-life entrepreneurial environment (Nyanducha, 2006). The approach enables the tourist to engage in some activity, reflect upon the activity, derive insight from the analysis, and incorporate the result through a change in understanding of what (Sherman, Serbora & Pigman, 2008) calls experiential learning, which is gained through experience. Osuala (2009) opines that small-scale business remains a practical experience that empowers the youths for greater challenges of the future, as it will enable the individual to understand how the economic decision he makes will influence his present and future standard of living will understand how the labor market functions. Thus, entrepreneurship in business at grass root is supposed to be dynamic, practice-oriented, and activity-based through the application of different teaching strategies. According to Fred (2017), assessing the challenges of small-scale hotels in Nigeria would help highlight the challenges confronting small-scale hotels in Nigeria to tackle such challenges so that investors can be confident enough to invest in the Nigerian economy which would in the long run help in the socio-economic development of Nigeria. Studies have shown that people have neglected small-scale business and the business environment have not been friendly for people who do not have the required capital to sustain their business especially the establishment of hotels and recreational centers which requires huge capital and finance. It is against this background that this study is carried out to assess the challenges of small-scale hotels in Lagos state

1.2 STATEMENT OF THE PROBLEM

The major problem associated with small-scale businesses is the sustainability of the business. The majority of the hotels in Lagos state lack the required hotel facilities needed to make tourists and others comfortable (Evans, 2016). The establishment of hotels requires huge capital and adequate funding. Most hotel managers in Lagos lack the required managerial skills to run the business and the knowledge to make the hotel a tourist attraction site (Fred, 2017). Awaritefe (2017) in his inaugural lecture highlighted the problems facing Nigerian development and tourism sectors. He opined that most travelers often find it difficult to patronize hotels and recreational centers due to a lack of facilities. Another major problem facing the development of hotels in Lagos is the negligence of hotel owners who see the hotel business as profit-making rather than a tourism venture. Tourism is best effective if hotels are developed and provided with the tourism items needed to make tourists who wish to lodge after the sighting such as the case of Obudu Cattle Ranch and Tinapa, Calabar, Cross River State. It has been observed that small-scale businesses have not yielded much profit as expected. This often discourages businessmen/women who wish to venture into the hotel business since they see it as a seasonal business. Resources are therefore diverted to other sectors thereby causing serious setbacks in tourism since hotels when developed to world standard are major sources of tourist attraction in developed and developing world. Most hotels that are located in flooded areas and difficult terrain face usually have low patronage since most tourists prefer accessible areas to inaccessible routes. These problems have hindered the development of hotels in Lagos at large. This study is therefore carried out to address the aforementioned problems.

• Objectives of the study

The following are the aims and objectives of embarking on this study

• To examine the challenges of small-scale hotels in Lagos
• To identify factors that can enhance the growth of small-scale hotels in Lagos.
• To know if investors are confident of investing in the hotel sector of Nigeria.
• To know the magnitude of challenges confronting small-scale hotels in Lagos.
• To proffer solutions to the development of small-scale hotels in Nigeria.

• Significance of the study

Assessing the challenges of small-scale hotels in Nigeria would help highlight the challenges confronting small-scale hotels in Nigeria to tackle such challenges so that investors can be confident enough to invest in the Nigerian economy which would in the long run help in the socio-economic development of Nigeria.

• Scope of the study

This study is on the assessment of the challenges facing small-scale hotels in Nigeria. With Aso Rock Hotels Lagos as the case study.

• Research questions

• What are the challenges of small-scale hotels in Nigeria?
• What are the factors that can enhance the growth of small-scale hotels in Nigeria?
• What is the level of challenge confronting the hospitality sector in Nigeria?
• What are the solutions to the development of small-scale hotels in Nigeria?
  • Research Hypothesis

H₀: The challenges of small-scale hotels in Lagos are low.

H₁: The challenges of small-scale hotels in Lagos are high.

H₀: Small-scale hotels do not impact the economic status of Nigeria

H₁: Small-scale hotels impact the economic status of Nigeria

• Definition of terms

• Hotel: An establishment providing accommodation, meals, and other services for travelers and tourists, by the night.
• Infrastructure: The basic physical and organizational structures and facilities (e.g. buildings, roads, and power supplies) needed for the operation of a society or enterprise.
• Economy: The state of a country or region in terms of the production and consumption of goods and services and the supply of money.

1.8 ORGANIZATION OF THE STUDY

This research work is organized into five chapters, for easy understanding, as follows

Chapter one is concerned with the introduction, which consists of the (overview, of the study), historical background, statement of the problem, objectives of the study, research hypotheses, significance of the study, scope and limitation of the study, definition of terms and historical background of the study. Chapter two highlights the theoretical framework on which the study is based, thus the review of related literature. Chapter three deals with the research design and methodology adopted in the study. Chapter four concentrate on the data collection and analysis and presentation of finding.  Chapter five gives a summary, conclusion, and recommendations made of the study,  SMALL SCALE HOTEL IN NIGERIA

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