Ibis Hotels CEO blasts banks over loan delays, repayment conditions

The Group Chairman and Chief Executive Officer of HDV Nigeria Limited, owners of Ibis hotels in Nigeria, Olufemi Okenla, has called for a review of project financing practices by Nigerian banks. He says delays in loan disbursement and harsh repayment obligations are raising the cost of private investments.

Okenla spoke at the weekend at the commissioning of the 120-room Ibis Hotel Lekki in Lagos. He disclosed that a commercial bank took eight months to reject a financing request it had initially indicated would be approved. Another bank delayed the release of an already-approved second tranche of a loan by nine months.

Repayment before projects generate cash flow

Okenla said standard project financing practice should allow developers to begin loan repayment after a project starts generating cash flow. That is not the case in Nigeria, where lenders demand repayment before projects are completed. He said HDV had paid billions of naira in financing costs before the opening of the Lekki hotel.

“The amount we have paid in project financing before even this commissioning runs into billions for the little money we took from them,” Okenla said.

Naira depreciation hits financing burden

He also said the naira’s depreciation from about N460 to the dollar to around N1,500 between 2023 and 2025 significantly increased the project’s financing burden. A sum of N1.5 billion set aside while awaiting a favourable exchange rate was expected to be worth about $3 million. It was worth only about $1 million when the funds were eventually drawn down, resulting in a loss of about $2 million in dollar terms.

HDV signed a memorandum of understanding with Accor in 2008 to develop 10 mid-scale hotels in Nigeria over 15 years. Okenla attributed the delay in completing the Lekki project to funding and infrastructure challenges, rather than weak demand. While Ibis Ikeja was completed in 36 months, the Lekki project took four years and eight months from the acquisition of the land in March 2020, when the COVID-19 lockdown began, to completion.

He said the delay was caused by currency depreciation, financing bottlenecks, shortage of skilled artisans, theft of construction materials and personal bereavements during the period.

Sanwo-Olu speaks on hospitality’s role

Lagos State Governor Babajide Sanwo-Olu, represented by Secretary to the State Government Bimbola Salu-Hundeyin, said the hospitality industry should be viewed as part of the state’s economic infrastructure because of its contribution to business travel, conferences and commercial activities. She said the Lekki axis had become an important economic corridor, with the Lekki Deep Sea Port, Lekki Free Trade Zone and growing clusters of corporate and technology businesses.

Salu-Hundeyin urged the hotel to patronise local suppliers and invest in skills development for young Lagos residents. She added that the government would continue to attract private investment into the state.

Okenla urged the Lagos State Government and banks to work with private investors to develop a project financing framework that ties loan repayment to a project’s cash flow rather than fixed repayment schedules. For Nigerian businesses, the lesson is clear: the cost of capital and currency swings can make or break long-term projects, and without a more flexible financing model, private investors will keep carrying the burden.