Insights
How profitable is a hotel business in Nigeria? A 20-room example
One month at a 20-room Nigerian hotel, worked out in naira: what the rooms earn, what diesel and staff cost, and the occupancy it needs to cover its running costs.
by Mark Ezema ·
It depends on a few numbers: rooms sold, their price, the generator’s hours and the staff bill. Here is one month at a 20-room hotel in naira, with every assumption shown so you can put in yours.
The month
In a 31-day month, 20 rooms give 620 room-nights to sell. Say guests stay 403 of them, 65% occupancy, at an average rate of ₦28,000 with VAT and other taxes taken out. Its room revenue is ₦11,284,000, counted for the nights stayed, not when guests paid. If those terms are new, here is how occupancy and average rate work.
The bar and restaurant are left out. If yours make a profit, add the profit, not the sales.
What the month costs
Count each cost in the month it was used, paid or not: the diesel burned, not the diesel bought.
| Cost | Worked out as | For the month |
|---|---|---|
| Diesel used | 7.3 litres an hour × 12 hours × 31 days × ₦1,900 | ₦5,159,640 |
| Staff | 14 people × ₦100,000 on average | ₦1,400,000 |
| Room supplies and laundry | 403 rooms sold × ₦2,500 | ₦1,007,500 |
| Everything else | Grid electricity, water, repairs, internet, licences, marketing | ₦2,000,000 |
| Total | ₦9,567,140 |
That leaves ₦1,716,860 before rent, loan interest, depreciation and tax, so it is not yet profit. Whether that is a good return depends on what the building cost and how it was financed.
Where the numbers come from:
- Diesel price. On 10 and 11 October 2026, depots sold diesel for ₦1,720 to ₦2,000 a litre, before delivery to the hotel. Use what you paid.
- Fuel burn. A 60 kVA generator at half load burns about 7.3 litres an hour, according to its maker’s data sheet.
- Twelve hours a day is an assumption. Read yours from the hour meter.
- Staff, supplies and everything else are round example figures.
Diesel is the number that decides it
Diesel per room sold = diesel used in the month ÷ rooms sold.
Here, ₦5,159,640 ÷ 403 = ₦12,803: nearly half the ₦28,000 average rate. A hotel staff union’s general secretary told The Sun in 2025 that about 40% of hotel revenue goes on diesel and generator maintenance: a wider measure, but the same picture.
This example assumes the generator runs the same hours however many rooms are sold. More guests burn a little more, but most fuel is burned either way, so the hours decide how many rooms you must sell. At 403 rooms sold and ₦1,900 a litre:
| Generator hours a day | Diesel per room sold | Break-even occupancy |
|---|---|---|
| 8 | ₦8,535 | 43% |
| 12 | ₦12,803 | 54% |
| 16 | ₦17,071 | 65% |
Every four extra generator hours a day raise the occupancy this hotel needs by about 11 points. At 16 hours, it needs about 65%: everything it sells just covers the running costs.
Work out your own break-even occupancy
Break-even occupancy = monthly costs that don’t change with rooms sold ÷ (average rate − cost per room sold) ÷ room-nights available.
For the example: (₦5,159,640 + ₦1,400,000 + ₦2,000,000) ÷ (₦28,000 − ₦2,500) ÷ 620 = 54%.
This covers the running costs above, not rent, interest or depreciation. Above it, each extra room sold adds up to ₦25,500 towards those, a little less for the extra air conditioning.
Bringing the diesel figure down
- Measure it every week. Dip the tank at the start and end of the week: litres used = opening tank + litres bought − closing tank. Note the hour meter and the rooms sold. Litres used ÷ hours run is the burn per hour; litres used ÷ rooms sold is the figure above. If either jumps without a reason, ask why before the month ends.
- Match the generator to the load. A lightly loaded generator burns more fuel for each unit of power. One 20 kVA set’s data sheet works out at about 0.63 litres per kWh at a quarter load, against 0.33 at full load. If you have a smaller set, run it when the load is low, such as the early hours.
- Know what an hour of grid power is worth. Band A grid power is ₦209.50 per kWh in the regulator’s September 2026 order for Ikeja Electric, unchanged since August 2024. Diesel power costs your diesel price × litres per kWh: at ₦1,900 and that set’s 0.33 to 0.63 litres, about ₦630 to ₦1,200. Check your own bill; on these figures, Band A power costs a third or less.
In Janus, occupancy and the average rate come from the stays your team records, and an uploaded diesel receipt can become a prepared expense for someone to check. Start this month: dip the tank on the first and last day, and divide the litres used by the rooms sold. See how Janus works for hotels in Nigeria.
