Furore over Supreme Court judgement on hotel classification

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Ipaye

The recent judgement of the Supreme Court that the Federal Government and its agencies, especially the Nigerian Tourism `Development Commission (NTDC), have no right to license and classify hotels in Lagos State is still eliciting mixed reactions from stakeholders in the industry, reports Dike Onwuamaeze.

“The Federal Government lacks the Constitutional vires (powers) to make laws outside its legislative competence which are by implication residue matters for the State Assembly: the National Assembly cannot, in the exercise of its powers to enact some specific laws, take the liberty to confer power or authority on the Federal Government or any of its agencies to engage in matters which ordinarily ought to be the responsibility of a State Government or its agencies. Such pretext cannot be allowed to (endure) to the Federal Government or its agencies so as to enable them encroach upon the exclusive constitutional authority conferred on a state under its residual legislative power:”

With the above introductory statements, the Supreme Court of Nigeria, in its ruling in July 2014,  declared  that the Federal Government and its agencies, especially the Nigerian Tourism Development Commission (NTDC),  have no right to license and classify hotels in Lagos State (and by implications in all the states of the federation).  The ruling stripped the NTDC the powers conferred on it by the NTDC Act 1992, “to register, classify, grade and regulate all hotels, motels, hospitality and tourism enterprises, and tour operators.”

Supreme Court held that the commission had none of these powers. It limited the NTDC to its proper constitutional role, which is the regulation of “tourist traffic.” Justice Sulieman Galadima of the Supreme Court relied on the Oxford Advanced Learners Dictionary 7th Edition, which defines a “tourist” as a person who is travelling or visiting a place while “traffic” is movement of people or goods from one place to another. Applying these definitions, Justice Galadima stated that the contention of the Plaintiff (Federal Government) could not be sustained because item 60(d) of the 1999 Constitution as amended confined the powers of the NTDC to the regulation of only “tourist-traffic.” The court ruled that the three laws promulgated by the Lagos State government to regulate hotel and hospitality businesses are within its residual powers and not in the exclusive or the concurrent lists.

Emboldened by these favourable rulings, Ade Ipaiye, Attorney General and Commissioner for Justice, Lagos State,  enthused that: “it is important to make it clear that if anybody pretends not to know which government should regulate tourism at this stage, whether the hotel licensing law or the hotel occupancy and consumption law was valid, then the person should refer to the decision of the Supreme Court in those two cases and those decisions are binding on all authorities and persons and courts in Nigeria.”

Disun Holloway, Commissioner for Tourism and Inter-Governmental Relations, Lagos State, said that the essence of the ruling was to “make sure that the tourism and hospitality industry performs optimally.”

What the Lagos State government will make out of its new powers and the way other state governments will emulate it are yet to be seen. Checks by TheEconomy showed that it has not communicated what the new dispensation holds for hoteliers. A visit by this magazine to the Ministry of Information and Strategy, Lagos State, to get government’s views on the issue yielded no information. Also, a member of the Hoteliers Association of Nigeria, Lagos, refused to volunteer any information on the matter. He said that the association would speak with one voice after hearing from the state government.

But Samuel Alabi, president, Hotel and Personal Services Employers Association of Nigeria (HOPESEA) has appealed to hotel owners to comply with the Lagos State Hotel Licensing Law. He said the law was desirable in the light of existing security challenges across the country. “This law will give operators the guidelines on how to operate their business successfully in keeping with the saying that `where there is no law, there is no offence’,” Alabi said.

However, some experts in the hospitality and tourism business viewed the court judgment as a huge setback for the development of the country’s hospitality industry which, according to Stella Mbanefo, director-general, NTDC, attracted $649.47 million from 4,037,808 tourists in 2013 as against 1,414,000 tourists in 2009. For them, the task of licensing and classifying hotels should be the responsibility of a national agency that would maintain homogenous standard throughout the whole country. They were also worried that those with the clout and means in their respective states would easily influence the classification of their hotels to favour them. For Aninoriste Anyafulu, lecturer and former head, Department of Hotel and Hospitality Management, Yaba College of Technology, “the Supreme Court judgment has become a very sad experience for us in the hospitality trade.”

Indeed, G. A. Falade, Professor of Tourism, Afe Babalola University, Ado Ekiti, said the Supreme Court judgment would bring fractionalization in the operation and economic activities of hotels in Nigeria.

One of the unintended consequences of the decentralization of hotel classification in the country is that it will hinder the development of indigenous hotels and encourage the patronage of multi-national hotels because “tourists usually prefer destinations where they can have and experience the best for their money.”

The absence of proper classification of hotels into one, two, three, four and five stars is seen as the bane of hotel industry in Nigeria. Some Nigerians, however, believed that the industry would have grown beyond its current level if hotels were properly classified. “All over the world, hotels are graded to determine the categories each of them belongs. We haven’t done that in Nigeria and that is why places which are not supposed to be called hotels, parade themselves as such,” Anyafulu said.

Under normal circumstances, a building with less than 20 rooms should not be called a hotel.

According to experts, only the Hilton Transcorp is qualified to lay claim of a five-star hotel in Nigeria. Another hotel that is on the verge of becoming a five-star hotel is Eko Hotels and Suites. A five-star hotel, according to Anyafulu, must have a helipad, guerdon service, sauna parlours, specialised cuisine, restaurants, bars and a number of presidential suites. Such a hotel must have event halls that can seat between 5,000 and 10,000 guests and be capable of hosting multiple-functions at the same time. Other facilities expected from a five-star hotel include swimming pools, lawn tennis courts and table tennis facilities among others. The guerdon service allows a guest’s meal to be prepared right in his presence as he sits on the table.

The removal of hotel classification from the NTDC was also seen as a self-inflicted wound. The commission never did a good job of regulating the sector, if at all it did anything. It failed to enforce the standards when it was in charge. “If the government vis-a-vis its agency in charge had been serious, and know what they are doing, this ought to have been settled over the years,” Falade said, adding that the “future of tourism development in Nigeria lies in the hand of the government and the availability of experts that can truly deliver.”

The commission’s effectiveness was hindered by poorly qualified heads who knew next to nothing about the tourism and hospitality business, but as result of their political connections found themselves at the helms of regulatory agency. There was a time a broadcaster was appointed to lead the NTDC, which was a clear case of a square peg in a round hole. “How can a person like that really regulate a sector that needs specialised knowledge? It becomes a problem,” he said.

The dearth of expertise that would drive the sector’s growth was not helped by the proclivity of the NTDC management to shun Nigerians with the right technical skills. Even academicians who are willing to do their sabbaticals in the commission were effectively fenced out. “There are still professionals in this country for Christ’s sake. If you check, you will find them. They are not just people with degrees but also with proven contributions to the sector. What we see in Nigeria is that everyone is a tourism expert. But that is a very specialized area,” Anyafulu said.

These are the major reasons the Nigerian tourism industry is still very underdeveloped in spite of its enormous potential which, according to Taiwo Oyedele, a partner and head, Tax and Corporate Advisory at PwC Nigeria, could “easily create more jobs than oil and gas, banking and telecommunications sectors combined.”

The removal of hotel’s classification from the purview of NTDC means that the commission has lost a major source of revenue. The commission lost the right to organize the participation of Nigeria in foreign tourism exhibitions like the World Travel Market, London, and the International Tourism Pourse, Berlin, Germany to the Ministry of Tourism due to its nonchalant attitude. Moreover, functions that could be carried out by its employees are being contracted out at the expense of the commission.

Hotel business has a long history. It began in Nigeria in 1928 when the Nigeria Railway Corporation set up guest houses along its routes. These guest houses were followed by hotels like Kano Central Hotels, Hill Station Hotels, Jos, and later the Ikoyi Hotels, Lagos. Another landmark in the growth of hotel business in the country occurred at the twilight of colonial rule in 1960. Hotels were built to cater for the hosting of guests that would grace Nigeria’s Independence Day ceremony. These include the Federal Palace Hotel, which was designated to host Queen Elizabeth of England, and Bristol Hotel.

The third generation hotels commenced soon after the independence when the regional governments established hotels to cater for their needs. These hotels include the Presidential Hotels in the East; Hamdala Hotel in the North and Premier Hotel in the West. The fourth generation hotels in Nigeria commenced in the 1980s with the likes of Sheraton and Eko Hotel and Suites. This era coincided with the coming of the multinationals into hotel business in the country and the beginning of commercialization and later privatization of government-owned hotels.

However, the era also marked the gradual deterioration in manpower development in the industry. Privatization led to the closure of Nigeria Hotel Limited (NHL) which previously owned the Ikoyi and Kano Central Hotels. Before it became defunct, it used to run the only training school that provided basic professional training for hotels in the country. The situation was not made any better by the multi-national hotels’ lack of interest in manpower development. They arrived without training infrastructure that would uplift the industry.

Victor Ola Kayode, executive secretary, Nigerian Hotel and Catering Institute (NHCI) said that “staff like waiters, waitresses, bedroom stewards, cleaners, technicians and receptionists who are trained to provide professional services are no longer in the industry. This affects the quality of services in the industry.”

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