For the president of the National Union of Food Beverage and Tobacco Union (NUFBTE), Lateef Oyelekan, the union running a hotel business and others was borne out of necessity, the need to provide accommodation for members of the union spread across the country anytime they were in Lagos for meeting. But the union later found out that it could be a good source of revenue provided it was run professionally. Starting with a 50-room hotel, in three years, the union was able to construct the second phase with an event centre, swimming pool, gymnasium and other facilities. Hotel business falls under the hospitality industry and one of those businesses that boost the economy of a nation. Oyelekan speaks more on how to run a successful hotel business:
Why hotel business
We decided to go into business generally looking at how wasteful the country had been in the past administration, we believe that there would be a time the country might relapse into economic recesssion like we experienced some years back. Hence we believe we needed to think ahead, because most times, when there is crisis, our members suffer. Like now, we have lost a lot of our members due to redundancy that came out of the economic challenges faced by the companies in our sector. Besides, we normally incurred huge expenses each time we held our meetings, the National Administrative Council, the National Executive Council and our delegates’ conference. Initially, we planned to build a guest house, but later we saw the commercial value in running a hotel, that it could expand our financial base, now that our check-off dues is diminishing due to job loss. We looked at the maintenance of the 50 rooms, if we are going to use it alone, it would be awesome; so, we decided to make it commercial and that was what gave birth to Food Union Hotel and Suites.
Hotel business would have been the best, but there are a lot of challenges. In Nigeria, there is no hotel that would not have generators, and they have to be huge generators. The price of diesel to run generators is quite high, like in our hotel, we used about N3.5 million worth of diesel in a month. But if the electricity were working in this country, the expenses on diesel would have been part of our profit. Such money could also have been used to improve facilities in the hotel, and welfare of the workers.
Profitablity of hotel business
In spite of the challenges, it is still profitable to run a hotel business. To really make money, I would say the value addition facilities provided would create the niche for the entrepreneur, not just the accommodation alone. For example, our hotel has such facilities as an event centre that can sit up to 1,000 guests, a conference room that can accommodate up to 50 people, a swimming pool, gymnasium and others. So, some of our management and others normally use our facilities for their meetings, retreat and events.
So far, we have no regrets going into the business. Going into the business has made it easier for us to pay the salary of our workers, both at the secretariat and the hotel.
Though I am not in the account (department) and would not be able to say specifically what the annual profit is, I can say authoritatively that the first phase of 50 rooms was able to pay for the construction of the secondphase, which has state-of-the-art facilities, with the additional 30 rooms, swimming pool, gymnasium, event centre and others within three years.
There are other basic things that an entrepreneur who wants to succeed in this line of business must do. The person would have to spend money on advertisement; get necessary equipment and facilities, above all, hire professionals and good hands to manage the business. Also, the owner of the business, as the chief executive, must be duly involved.
It is also important that you have industrial washing machine, have water treatment in the hotel, so that the guests would have good water, not just for drinking even for bathing. Hygiene is very important. Besides, you must be able to get your products directly from the companies, without having to pass through middlemen. That would further save cost and boost your profit. I mean such products like soft drinks, beer, juice, foods like semo, milk. Then you must buy your cow, chicken, goat live and slaughter them, this means you must have a pick-up as well as a cold room for preservation. With those things in place, hotel business is a good business.