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Profitability of Hotel Business in Nigeria

Hotel Business investment

The difference between the revenue a commercial entity receives from its outputs and the opportunity costs of its inputs is the economic profit. An economic profit, as opposed to an accounting profit, considers both a firm’s implicit and explicit costs, whereas an accounting profit only considers the explicit costs shown on a firm’s financial statements. Economic profit usually differs from accounting profit because it includes additional implicit costs.

Economists frequently compare economic profits to normal profits because both take into account a company’s implicit costs. A normal profit is a profit required to cover the firm’s implicit and explicit costs, as well as the costs of the owner-manager or investors who fund it. In the absence of this profit, these parties would withdraw their time and funds from the firm and put them to better use elsewhere, so as not to pass up a better opportunity. An economic profit, also known as an excess profit, is the profit that remains after all implicit and explicit costs have been deducted.

The enterprise component of normal profit is the profit that business owners believe is required to make running the business worthwhile, i.e., it is comparable to the best amount the entrepreneur could earn doing another job. In particular, if the enterprise is not considered a factor of production, it can be viewed as a return on investment for investors, including the entrepreneur. equivalent to the return on a safe investment plus risk compensation for the capital owner Normal profit varies within and across industries; it is proportional to the riskiness of each type of investment, as defined by the risk-return spectrum.

Economic profits arise in non-competitive markets with high entry barriers, such as monopolies and oligopolies. In these markets, inefficiencies and a lack of competition foster an environment in which firms can set prices or quantities rather than being price takers, as in a perfectly competitive market. When long-run economic equilibrium is reached in a perfectly competitive market, economic profit becomes non-existent because firms have no incentive to enter or exit the industry. Profit and profitability are not synonymous, despite the fact that they are used interchangeably. Both are accounting metrics used to evaluate a company’s financial success, but they differ significantly. To determine whether a company is financially sound or poised for growth, investors must first understand what distinguishes profit from profitability.

Hotel Business investment

Profit is an absolute number that is determined by the amount of income or revenue that a company receives after deducting its costs or expenses. It is calculated on a company’s income statement as total revenue minus total expenses. A company’s goal is always to make a profit, regardless of its size or scope or the industry in which it operates.

Profitability is closely related to profit but there is one important distinction. Profit is an absolute number, whereas profitability is a relative number. It is the metric used to calculate the size of a company’s profit in relation to its size. Profitability is a measure of efficiency and, ultimately, the success or failure of a business. Profitability can also be defined as a company’s ability to generate a return on investment based on its resources when compared to an alternative investment. A company’s ability to generate a profit does not necessarily imply that it is profitable.

A hotel is a business that offers short-term paid lodging. Inside a hotel room, amenities can range from a low-quality mattress in a small room to large suites with larger, higher-quality beds, a dresser, a refrigerator and other kitchen amenities, upholstered chairs, a flat-screen television, and en-suite bathrooms. Small, low-cost hotels may only provide the most basic guest services and amenities. Larger, more expensive hotels may offer additional guest amenities such as a swimming pool, business center complete with computers, printers, and other office equipment, childcare, conference and event facilities, tennis or basketball courts, gymnasium, restaurants, day spa, and social function services. Hotel rooms are usually numbered or named so that guests can find theirs. Custom-decorated rooms are available in some boutique, high-end hotels. Some hotels include meals in the price of a room and board package.

Hotel Business investment

The right combination of location, price point, physical asset quality, marketing strategy, dedicated employees, and supportive investors and management partners can make owning a hotel profitable. A hotel, on the other hand, isn’t necessarily profitable by default, so you can expect a lot of effort to turn a profit. While the industry is tight-lipped about it, the average profit made by a hotel chain owner is estimated to be between N500,000 and N1,000,000 per year. Any revenue generated by your hotel must first be used to cover operating costs.

The following are some hotel amenities that are profitable in the hotel industry:

Directory of Hotels:

Hotel directories are without a doubt one of the most valuable hotel amenities that a hotel can offer to its guests. Hotel directories are simply meant to inform your guests. Providing information about local activities could save your front desk staff time and improve customer satisfaction. Use directories to inform visitors about additional services you provide. Add it to your directories if you provide room service, massages, upgraded toiletries, and so on, and you’ll quickly see the return on your investment.

If you own a forward-thinking hotel that provides information to guests via tablet, you should also offer guest room directories in tablet case design.

Banquet Tableware:

Banquet supplies include everything you’ll need for hotel events. This includes weddings, banquets, corporate events, and other types of gatherings.

Your banquet supplies should include a variety of items that are highly functional, lightweight, and easy to store, such as LED signs and candles, table stands, portable vases, and more.

Products for Meeting Spaces:

Desk blotters are a common hospitality item. Material and customization options for desk blotters vary. They are frequently used as a writing surface and as a desktop protector. This is a popular tool used to complement hotel conference rooms, add professionalism, and improve customer experience.

Menus at the Pool:

Keeping pool menus near your pool informs guests about your offerings and encourages them to stay longer and buy more products and services from you. Pool menus are waterproof, long-lasting, and extremely durable. You should also carry a wide range of branded pool products such as sunglasses, lip balm, sunscreen, towels, and other accessories. These are ideal for luxury resorts.

Extras for the Guest Room:

Hotel Business investment

Guest room accessories are a broad term that encompasses all of the essentials found in a hotel room, such as note pads, desk organizers, channel guides, ice buckets, and other items. These accessories are available in a variety of materials and can be custom branded to help your hotel build brand awareness.


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