What made up the 97% of domestic travel’s contribution to tourism revenue in 2016?

by Olukayode KolawoleThe data presented in the recently published hospitality report on the Nigerian hospitality sector by Jumia Travel has finally cleared the air on the

argument that Nigeria doesn’t have enough tourist destinations to attract people’s interest to spend their holidays in the country instead of traveling to some popular holiday destinations abroad.

It’s fair to say that without the economic woes that plagued the country last year which placed lots of pressure on people’s spending habit, no one would have fully understood how much the country can generate from the tourism sector.

Meanwhile, the 2014 & 2015 World Travel & Tourism Council (WTTC) reports indicated that domestic travel had always contributed more than two-third of tourism’s contribution to the country’s GDP. For instance, in 2014, domestic travel spending generated 95.8% of direct Travel & Tourism GDP compared with 4.2% for international visitor exports (money spent by foreign visitors to a country), and was forecast to grow by 2.7% in 2015 to NGN2, 544.3bn. In 2015, domestic travel increased slightly to 97% while international visitor export went below 4%. Despite the huge revenue generated in the last 3 years, the tourism sector doesn’t seem to reflect this massive income. There are two reasons why this is so.

First, the revenue generated primarily reflects the activities of industries such as hotels, travel agents, airlines and other passenger transportation services (excluding commuter services). But it also included, for example, the activities of the restaurant and leisure industries directly supported.

Second, there was an ‘indirect’ contribution which encompassed the GDP and the jobs supported by travel & tourism investment spending – an important aspect of both current and future activity that includes investment activity such as the purchase of new aircraft and construction of new hotels; Government 'collective' spending, which helps travel & tourism activity in many different ways as it is made on behalf of the ‘community at large’ – e.g. tourism marketing and promotion, aviation, administration, security services, resort area security services, resort area sanitation services, etc; Domestic purchases of goods and services by the sectors dealing directly with tourists - including, for example, purchases of food and cleaning services by hotels, of fuel and catering services by airlines, and IT services by travel agents. 

The ‘induced’ contribution measures the GDP and jobs supported by the spending of those who are directly or indirectly employed by the Travel & Tourism sector.

Bruce Prins, a renowned hospitality consultant for over two decades shares fascinating trends that will shape the sector in 2017 (this year). ”More recreational facilities and services will be required; better reservation systems that are 24 hours and easy to action will be the deal-breaker; ease or disease of air travel will affect everything; renovation and maintenance will make a hotel, and the lack thereof will break a hotel; and social media is, and will be even more so the most powerful marketing tool,” stated Mr Bruce.

The current President of the National Association of Nigeria Travel Agencies (NANTA), Mr. Bankole Bernard offered some suggestions on how to take the travel and tourism sector to the next level. In his prescription, he mentioned four major quick fixes; government endorsement of policies that favor the industry in terms of forex request from CBN; aviation fuel supply to ease operations within the industry; improved infrastructure at airport terminals; and privatization of the aviation industry. According to him, once all of these are implemented, the sector will grow unstoppably.

There are also some insightful data on the state of e-tourism in the country. First, Nigeria is among the leading countries with the highest smartphone penetration in Africa. In 2016, there were 15.5 million smartphone users in Nigeria.

Second, the success of e-commerce in the country can also be a consequent of the increase in the number of smartphone users, which is forecast to reach 18 million users in 2017.

Third, internet penetration stood at 52% (97, 210,000) of the country’s population (186,879,760) as at June 2016.

Fourth, e-commerce is estimated to be worth US $13billion by 2018. However, the country is still lagging behind African countries such as Morocco, Egypt, and Kenya.

Fifth, globally, the number of hotel bookings made online stand at 148.3 million while the percentage of same day hotel reservations via smartphone stand at 65%.