- As hotel operators in Lagos cry over double taxation
Nite clubbing, womanising as well as other expensive lifestyles are surprisingly not on the decline despite the harsh economic condition in Nigeria of today. This is evident in Lagos, as new hotels, lounges and entertainment centres are springing up in various areas of the state especially in Arowofela area of Ifako-Ijaiye Local Government CHIJIOKE IREMEKA reports
Proliferation of hospitality centres, night clubs among others with short-rest services, have been observed around Arowofela area of Lagos State, along Iju-Ishaga Road in Ifako-Ijaiye Local Government Area of the state, despite the harsh economic condition sweeping across the country. This, perhaps, is the manifestation of an earlier position of hospitality experts that the business may not be affected by the wave of this tempest.
It was once forecast by economists that while every other sector of the Nigerian economy may be affected, this section will wax stronger in the midst of the dwindling economy for obvious reasons. The hospitality consultants said, in spite of the rate of hunger in the country, the indulgence of fun-seekers in consumption of alcohol and hot pepper soups would keep them going.
This is believed to act as a palliative to cushion the economic situations. Those involved have insisted that these habits would douse their apprehension about life and consequently have positive effects on the profit margin of the operators of the entertainment centres.
Sunday Telegraph visited Arowofela, along Iju-Ishaga Road in Ifako-Ijaiye Local Government Area of the State, where cluster of hotels, guesthouses, open bars, lounges and night clubs and adult bars were discovered under different names.
It was also discovered that these outfits are located in the same area but their closeness to one another does not pose any threat as they have their peculiar characteristics, according to the Manager of a two-weeks-old hotel and Lounge in the area, Mr. Sunday Albert.
He noted that the operators and managers of these hospitality centres are in the habit of visiting and patronising themselves. “I have visited some of these clubs. We do not fight, rather we see ourselves as friends in business.”
According to him, each club has its own activities, adding that, each has its certain class of customers that patronise them, which determines services to be rendered.
Albert stressed, “There are other hotels on the axis but I can tell you that the competition is not much. It’s okay because each centre has its own peculiar services and programmes. Our own activities are different from others. We have different sets of customers.
The environment is okay and the calibre of people here are the types of customers we crave for. “In my own place, we run Nite Club upstairs, open bar downstairs and lodging accommodation services.
He added: “Wednesdays is our ‘Ladies’ Night. On Thursdays, we have general party, where you can come in with your friends, dance, drink and go. While, Fridays is for live musical band performance till dawn. We have maximum security on board as well as bouncers to protect our customers.
The admission is free, provided the person buys drinks. Others operate Nite Clubs but we still do our business. We cooperate with one another. We are still test-running the hotel. I can’t really comment on the impact of economy on our business because we just started.
But so far, so good, the patronage has been good.” However, during Sunday Telegraph’s visit to the area, it was gathered that over nine different hotels and Nite Clubs are located in the same area, which makes one wonder at the level of competition.
It was also discovered that most Nigerians defy the harsh economic situation in the country to patronise these hospitality centres basically to relax. Many of our respondents said they take to occasional drinking and smoking to ease off excessive tension in the country. To the fun-seekers, this is an alternative happiness.
“If I go drinking, I cool off some tension,” said Mr. Anthony Chukwuma. He believes that going to the club and open bars to drink and dance with friends would ease his challenges and help him achieve momentarily pleasure and forget the situation in the country.
“I came to catch some fun and forget everything troubling me for now,” he added. A supervisor in one of the bars who spoke to Sunday Telegraph on ground of anonymity, said customers still come around to patronise them despite the economic situation. According to him, people can only stop taking alcoholic drinks and pepper soups when life is no more.
“We open business from 9am to 12 midnight. We give our bar on hire for activities like wedding and other ceremonies. We make and sell ‘suya’ to our customers and we welcome all customers but those with bags are frisked for security reasons,” he said. Uvie Oghenevo, one of the customers we spoke to, said, whether there is cash crunch or not, life must go on.
“I will stop eating pepper soups and drinking alcohol when I’m dead. These are some of the things that keep both the poor and rich happy. Lack of money does not stop drinking, clubbing and having ladies around you, for these are the things that keep you when you don’t have money,” he said.
Another customer, Jide Akanbi, said drinking and clubbing are part of the things he does to while away time after work. Jide, a factory worker said, after much work in an enclosed factory, he takes solace in relaxing with his friends and associates in clubs.
Of course, the presence of mammoth customers at these entertainment centres, does not in any way, point to the fact that there is cash crunch in the country. Going by this, one would infer that drinking, clubbing and visiting of short-rest kind of accommodations are a lifestyle and habit developed over a long period of time.
In as much as these entertainment centres are making marginal profits, the operators are complaining bitterly of the effect of double taxation from the federal and state governments.
The cost of generating electricity and provision of security are some of the overhead cost they are grappling with. Speaking on the challenges facing hospitality business in the area, and perhaps, in the state, the Managing Director of one of the hotels, Mr. Leonidas Ihonre Oriarewo, said hospitality business is seen by non-operators as lucrative, but it is a different ball game as the cost of running hotels is very high.
He added, “Even before the prices of goods and services sky rocketed, hotel business has been an expensive venture. Making your customers comfortable takes a lot of sacrifices. “The provision of uninterrupted power supply in Nigeria is capital intensive for you to keep doing business as hoteliers. Other facilities to give maximum comfort must be in place. These, on its own eat into your profit margin.
“Tax remission to government, both the federal and state is a thing you must be ready stomach if you must succeed as an hotelier. Five per cent Value Added Tax must be paid to the federal revenue agency.
When you secretly include this to value of services provided you will be pricing yourself out of business. So, to avoid this, we charge normal rates for services and this has not been good for business.
The same goes for the Lagos state’s Consumption Tax where five per cent is charged. I see this as double taxation when you look at the five percent charged by the federal government it means we are paying 10 per cent tax.
“These charges can’t be conveniently transferred on the customers. What we have been doing to stay in business is to painfully sell at lower prices the same with what obtains in the community.
A lot of hotels are consistently circumventing the tax authorities and are not bothered about the Value Added Tax on services, but those of us that have submitted ourselves as law abiding citizens, are the ones suffering the cut throat double taxation. As a Chartered Accountant, I know what to do with taxes.
“Local government officials come with liquor, television and TV licensing among other mandatory taxes. They also impose their clients on us on fumigation of our environment.
“Whether you like it or not, you are compelled to patronize their recommended agencies when the same services can be rendered better and cheaper by other private outfits.
These are some of the challenges we have in this business. Poor road network is another problem here. Even, when these tax officers and local government officials come to collect revenue, they pack their vehicles far away from here and walk in because the road to the street is riddled with pot holes.
Despite this, patronage by fun seeking Nigerians has not been affected, the bars are always filled to the brim at weekends. An evidence that Nigerians are thinking more of catching fun than mulling over the biting economic problem in the country,” he said.
– New Telegraph
