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Tuesday, July 14, 2015

Depreciation of Naira Weakens Purchasing Power of Holiday Seekers

With the continued depreciation of the naira against major world currencies, particularly the US dollar, most outbound summer holiday seekers in Nigeria are being forced to consider alternatives, including outright cancellation of this year’s vacation abroad.

The official exchange rate is N196 while the black market rate is  N230. This N23 margin  between both rates, along with the 19 percent drop in the value of the naira against the dollar this year, on account of the slide in crude prices, is bloating the cost of foreign holiday travel for Nigerians.

 dollars

Many would-be summer holiday travellers are being forced to limit their travel to the African continent, or even to destinations within Nigeria, often abadoned for their lack of facilities, security and engaging activities.
BusinessDay investigations reveal that foreign airlines and hotel bookings, which typically would have piled up ahead of the summer holiday, have declined below 30 percent, against an average of 40 percent this time last year, which itself was hindered by the Ebola pandemic.

The implication is that some overseas hotels, especially in the US, are now disposing rooms earlier booked by Nigerian holiday seekers, as the holding period expires.
The investigation also revealed that with the increasing exchange rate, an average holiday outing for two persons for a weekend abroad (though depending on the airline, destination, and type of hotel) would cost between N1 million and N1.5 million, while a family of four would spend an average of N3 million. 

This reality has brought gloom to travel and tourism businesses and tour operators who mainly service people going on vacations abroad.
“By this time last year, I had sent five clients to the Caribbean, two to Los Angeles, and six to Dubai. Till now, they are not forthcoming. One told me he would rather use the money to complete construction of his house, while the other said children’s school fees were his new priority.
“All of them are putting off their vacations due to the high exchange rate”, Magnus Onyeka, a Lagos-based tour operator lamented. 

Some international airline carriers such as Lufthansa, Delta, United and British Airways, among others, are also feeling the impact, as most travelers now resort to cheaper but connecting flights.
Already, hotels and resorts across the  Carribbean , Dubai, UK, USA, and even South Africa, are concerned about the ugly trend, as Nigerian tourists who are top among their guests list and cherished because of their heavy spending culture, would be missing from the summer global vacation. 

However, an official of Atlantis Resort Dubai, who pleaded anonymity, said many of his usual guests from Nigeria, especially politicians, are shying away from ostentatious lifestyles now, because of the fear of being trailed by the anti-money laundering and security agents.
That, for him, is a reason not to expect many Nigerians this season.
No matter the issue, Nigerians will still visit, especially the super rich and those on corporate sponsorships, while the average holiday seeker will definitley cut down on luxury expenditure such as expensive champagne, casinos and chauffeur-driven tours. But that will mean less fun for them”, Onyeka said.
Femi Salako, a travel agent, says most of his Nigerian clients do not listen to business advice that would benefit them in the long run. 

“I told some people to start planning for their next summer holidays as they are returning from one, and also to buy airline tickets during the off season, when they are cheap, but they hardly listen.
“You have to have deep pockets now to travel, because everything has gone up with the dollar. South Africa, and even neighboring Ghana  is expensive now”, Salako said.

Ikechi Uko, a travel and tourism expert, says the best time to travel within the country is now that oversea destinations are expensive, but most Nigerian holiday seekers, according to him, would rather spend their life savings to jet out of the country to see the same thing Obudu Mountain Resort offers, just for status sake.
On the other hand, it is time to develop world-class destinations in Nigeria, invest in hospitality infrastructure, quality offerings and manpower, to woo Nigerians back to the country, rather than moving the little money in the country out to service and sustain the hospitality indsutry abroad, he urged.

OBINNA EMELIKE

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