Op-Ed: Kwara Hotel & The 17.8bn Renovation By Sulaiman Olayiwola Yusuf

The past few weeks in Kwara have entertained opinions, engagements and discussions about the proposed Kwara Hotel (KH) renovation. On a WhatsApp platform, I have contributed as a Tourism Development Professional on the dynamics of hospitality business and the reality of sustainable operation to realize Return on Investment (ROI) on the 17.8bn project cost. We must understand that Kwarans are in support of KH renovation. The project cost is the controversy. Before now, I could have written an article to make professional contributions but that wouldn’t be smart without being properly informed of the anatomy of the hotel. At this point, let us appreciate ENetSuD for the recent revelation on the valuation and anatomy of KH. Now, Kwarans can make informed contribution and take a position without flagrant bias.

It is imperative to note that no one outside the management and staff of KH can know fully the anatomy of the hotel. I have been a guest of KH and a regular visitor to the hotel facilities but still didn’t assume myself to know the anatomy. Using the “anatomy of Kwara Hotel” revealed by ENetSuD, I am now better informed to make a position as follows:

1. In hospitality business, hotel property is a perishable one. The FF&E (Furniture, Fixture & Equipment) deteriorate, depreciate and become obsolete in usage and time. Time to time, FF&E must meet standards to sustain excellent service delivery and performing revenue. Understanding this will give justification to why the supposed and controversial auctioning took place at KH. The hotel “auctioned” FF&E were deteriorated, depreciated and obsolete, hence the need to replace them with modern and high-end FF&E to give it a competitive hospitality status.

2. The superstructure of KH reflects both modern and historical architectural concept which are sacred elements that boost visitation in hospitality and tourism. KH has become a historical heritage for Kwara and its historical architectural concept must be preserved like the oldest hotel in the world; Nishiyama Onsen Keiunkan in Japan. Which is why KH should be ‘renovated/revitalized’ with an ideal hospitality business concept.

3. ⁠ The events and recreation facilities are viable source of revenue for KH. I will refer us to ENetSuD anatomy of KH to see the number of halls, game/sports, entertainment and recreational facilities that will contribute to source of the hotel revenue. The night club, bars, restaurants (continental and local cuisine) are also good source of revenue. There is also rent from office and shop spaces that is also a good source of revenue. Parking fee is also a simple revenue source.

4. Therefore, looking at the anatomy revealed by ENetSuD, 17.8 billion naira may not be far from what will give KH a competitive hospitality status considering the quality of materials to be used for reviving the hotel superstructure and FF&E to be fixed. FF&E enhance the overall ambiance of a hotel, making guests feel welcome and relaxed. The aesthetics of a hotel can significantly impact its brand image. Well-designed FF&E items create a visual identity for the hotel that can set it apart from competitors. Hospitality today has gone beyond room service, recreation and cuisine/food and beverages. Some FF&E have technologies that make guests feel special and have reminiscing experiences.

5. The people’s fear is that can KH generate at least 3.56 billion naira yearly for 5 consecutive years to break even? Or 2.5 billion naira for maximum of 7 consecutive years?

While there is no rule casted in stone that states how often hotels should be renovated, renovations and repairs must take place in a timely fashion to prevent additional property damage or increased expenses down the line. To attract guests and keep the hotel profits high, KH must strive to keep its properties safe, modern, and attractive. When the hotel is more than a few years old, we may be on the hunt for hotel renovation again. This is where some hospitality specialists and tourism professional like myself are presenting our concern of the hotel ROI. Many top notch hotels in Nigeria have lost their status due to unattainable ROI.

6. For a hospitality business to thrive in a state, the state must be a tourism destination. That is, destination for adventure, historical, education, medical, business and agro-tourism. It is the tourists’ traffic to Kwara State that will propel patronage of the hospitality businesses in the state. Currently, Kwara has hotels with high-end FF&E, thereby making hospitality business a very competitive one in Kwara. Which makes me fear that hospitality business may become saturated if the required socio-economic growth and development does not accompany hospitality business presence in Kwara state.

7. There are official statements from the government that have emphasized that KH will be renovated to a 5 star status. I must say, no one rates his property in hospitality business. Kwara state government cannot self-rate KH. Property rating standard may be a complicated one globally but there are criteria that determine a hotel’s rating. The criteria are determined by the quality of FF&E, food and beverages service, hygiene, parking facility, security, location, accessibility, view amongst other things. KH can achieve several criteria mentioned and unmentioned but it cannot achieve location and view which are primary rating criteria. The view from any wing of KH cannot earn the hotel a 5 star. It lacks the serenity and ambience that makes a hotel 5 star.

5 star or not, what is important is the standard of the hotel superstructure, quality of FF&E and guest experience that makes projected revenue realizable. In hotel or property rating, guest experience cum review plays a vital criterion. If KH has the standard superstructure and quality FF&E, guest experience will be enhanced, and KH can earn a competitive status.

8. In tourism development, which hospitality is a part of, it is always advisable that development is scaled even when the budgeted amount is available for a wholesome execution. A piecemeal execution that can make a hospitality property or facility operational is logical and strategic on two grounds: ROI and Renewed Experience (new things, new experience).

9. Comparative analysis of Crystal Group (CG) and Craneburg (CB) arrangement with Kwara State Government (KWSG).

a.) CG’s arrangement with KWSG is Fix and Operate with 3bn for 15years, subject to additional 5years performance contract. According to ENetSuD, “the actual cost of renovation work part of Kwara Hotel as proposed by Crystal group is N1,579,569,210.” The other half is to furnish and operationalize. While KH is operational, CG is to pay a yearly premium for the first five years and a percentage (15%) of gross profit to KWSG. The contract is subject to termination two weeks after due date for payment if CG defaults.

b.) CB’s arrangement with KWSG is Build and Transfer, which the government shall pay the proponent on an agreed schedule its total investments of 17.8bn expended on the project. In this arrangement, the government provides the financing and construction of the infrastructure and transfers it to the private sector for operation and management.

Now, for a business-centric state, which arrangement is strategic? In my opinion, I will opt for CG’s arrangement, while we use the rest of the resources to develop socio-economic and tourism attractions that will increase tourists traffic to the state.

Conclusively, professionals in hospitality, tourism and engineering sector can help Kwarans who are shrouded in obscurity with their opinions. The BEME and BOQ of the project will assist engineers and surveyors to make informed opinions as well. The BEME and BOQ will assist Kwarans to know the standard of structural work, and the quality and quantity of the hotel FF&E. Going forward, I implore Kwara state government to make relevant information available to the public in subsequent projects so as to avoid bias opinions. Yes! Government will always have its way. People should always have their say devoid of flagrant bias and let posterity judge as it adjudged past administrations.

May Kwara Succeed.