Beruflich Dokumente
Kultur Dokumente
BY
MUNZALI DANTATA
DIRECTOR GENERAL
www.nihotour.org
dantata.munzali@yahoo.com
BEING
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25TH MARCH, 2011.
TABLE OF CONTENT
1. Keywords
3
2. Abstract
4
3. Introduction
5
4. Background
7
5. Problem
8
6. Aim and objective
10
7. Review of literature
11
8. Methodology
14
9. Observation and discussion
15
10. Challenges of enhancing and enforcing regulatory framework
25
11. Prospect of enhancing and enforcing regulatory framework
27
12. Conclusion
28
13. Recommendations
29
14. References
30
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i. Keywords:
Tourism
Hotel
Catering
Hospitality
Entertainment
Accommodation
Operation
Regulations
Law
Act
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ii. ABSTRACT:
This paper believes that legislation is the foundation on which any industry
is built. Nigeria’s determined efforts to promote the tourism Industry started
since 1962 with the government’s involvement in the hospitality
enterprises. The business however blossomed to the admiration of private
investors. Today, every town and city is having one hotel or other sectors of
the industry. The major problem with the hospitality industry is the non
existence of indigenous laws and regulatory guidelines for sustained
operations, tax evasion through false declaration of profit; violation of
standard regulations of the national regulatory bodies and non legislation of
the sector by the National Assembly with disregard for operational laws.
Hence, the need for current laws is most beneficial to increase the volume
of inflows and receipts in tourism trade for socio-economic development of
our nation. Disrespect for the few laws in place has further priced the nation
low in choice destinations. The paper concluded that Nigeria has rich
tourism resources both developed and underdeveloped. Yet, the only legal
act empowering the industry lacks full powers to prosecute basic function
with mitigations particularly on hotel and catering operations. The paper
however recommended that for the industry to forge ahead and support
the tourism industry in the global market, legal aspect relating to the
hospitality and related service provisions in the industry must be reviewed
and amended with new enactments to achieve the sustainable tourism
development and the Vision 20 2020 goals.
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iii. INTRODUCTION:
At the beginning of the twentieth century innkeepers around the world were
offering beds to wayfarers in single location small inns. By the middle of the
century it became common place for hotels to have many branches in
different locations, and offering bigger facilities; heralding the era of mega
international hotel chain companies.
In today’s litigious society, a growing number of people would not just forget
about a failed airline or hotel booking or food poisoning in a restaurant
which necessitates constant review of laws. Rapid developments in the
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hospitality and tourism industry, therefore, have resulted overtime in the
emergence of related legislation in many countries of the world covering
new trends from premises and food liability, to franchising, employment and
management contracts etc.
Existing law in Nigeria covers the tourism and hospitality industry such as
food liability which has seen cases based in tort law. Other laws covering
transportation, labour, taxation etc also impact on the tourism and
hospitality industry.
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2. BACKGROUND
The Public Corporations and Organised Private Sector were also encouraged
to participate in the hotel business and that gave birth to most high class
hotels found across the cities to include Transcorp Hotel which was once
under Contract Management of Hilton Group.
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Hospitality legislation in Nigeria is rooted in the laws of the United Kingdom
(UK) inherited with the colonization of Nigeria effective from the 1st day of
January 1900. The laws that rules the industry today is deeply rooted in the
Inns and Hotel Proprietors’ Acts.
3. THE PROBLEM
For the hotel and catering business there are no such international
organizations with powers to sanction hotels for not meeting set down
standards. This is most witnesses with the hotels managed on contract
under the auspices of hotel franchise. The laws covering the hospitality sub-
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sector are scattered among many statutes. Amongst the laws or legislation
governing the operations of the hotels for instance is the Hotel Proprietors’
Act which is foreign and outdated.
Also still enforced but due for review in Nigeria is the Inn Keepers’ Act of
1878 received from the UK laws that regulated the hospitality industry in
the colony of Nigeria from the 1900s up to near independence. This
however influenced the Hotel Proprietors’ Act of 1956, and the Occupiers’
Liability Act of 1957.
The primary concern of these legislations was safety of life and property of
visiting guests, with a reasonable “duty of care” placed on hoteliers. This
legislation is grossly abused to the detriment of the client and the industry
at large Cournoyer, N.G., Marshall, A.G. and Karen L. Morris (1999:504),
Jefferies (1990:401) and Jefferies (1975:402).
Soon after the independence, Nigeria became a federation of three regions,
and there after four with each having parliaments making laws for their
regions which gave very little attention to the laws relating to the industry.
Given the call for foreign investment in the sector, franchising as a form of
management contract was introduced to have chains like Hilton, Sheraton,
Le Meridien and Protea taking over three to five stars hotels to manage.
Hence, cases of tax evasion, false declaration of profits for capital gains
were common features among repatriation of capital which is seen as a
serious economic sabotage through leakages.
Nigeria is a federation of thirty six states, and one federal capital territory.
Since the NTDC Decree of 1992, there has not been any new legislation
from the central government. However, since the new democratic
dispensation from 1999, some of the states have enacted laws regulating
hotels, food, gaming and liquor business in their states. While there is only
one body at the centre i.e. the NTDC that regulates tourism and hospitality,
some States have State Hotel Boards and Liquor License Boards and other
boards regulating hotel, bar, gaming and other related businesses, which
are separate from the NTDC’s role and not under the State Tourism Boards.
These and more are some of the basic problems with the regulatory
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framework in place.
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The aim of this paper is to improve the services of the hospitality industry as
a prelude to sanitizing the tourism industry and making Nigeria the ultimate
tourism destination in Africa. This will be pursued through the legislation
and actualisation of hotel franchising laws and its adherence in the
hospitality sub-sector. A review of the laws related to hotel business in
Nigeria with interest in hospitality business registration, operations including
franchising. Challenges and prospects of hospitality operations in line with
legal frameworks of the laws at domestic and international standards for the
elimination of substandard and poorly managed hotel establishments for
best practice are issues of concern.
INTRODUCTION
The hospitality industry in the context of this law is the preparation of food
and providing of food service, preparation and serving of drinks and
beverages, and offering accommodation services, as well as food
preparation that will be consumed at other venues (during travel, at events
and similar) and supply of such food (catering).
Narrowing the review down to the basics, the main tourism legislation in
Nigeria is the Nigeria Tourism Development Corporation (NTDC) Act, which
is Decree No: 81 of 1992 establishing the NTDC as the apex regulatory
governance body for the Nigerian industry. The main functions of the
Corporation by law includes (1) encouraging people living in Nigeria to take
their holidays in Nigeria, and people abroad to visit Nigeria; (2)
Improvement of tourism amenities and facilities including the development
of hotels and ancillary services; (3) Providing advisory and information
services; (4) Promoting and undertaking research on tourism; (5) Rendering
technical advice to states and LGCs in tourism field; (6) Registering,
Classifying and Grading of hospitality and tourism enterprises, travel
agencies and tour operators; (7) Assist in the development of museums, and
historical sites, parks, parks, game reserves, beaches, natural beauty spots,
holiday resorts, souvenir industries and publicizing tourism.
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State Tourism Boards:
The Act also provides for State Tourism Board (STB) in each State which is
expected to assist the Corporation in implementing the Act. This includes
among others (1) To recommend measures in their opinion which will enable
full effect to be given to be provisions of the Act; (2) Devise and carry out
schemes aimed at encouraging Nigerians to visit the State; (3) Identify,
preserve and protect and develop tourism resources and co-ordinate the
activities of tourism activities.
Another area of interest on the Act is that is the subsidiary legislation which
makes it mandatory for hospitality and tourism establishments to register
with their services in accommodation and food, and grading of travel
amusement parks etc.
State Legislation:
At State level, Cross Rivers State, among a few other States such as Lagos
enacted an Edict with regulations for tourism and hospitality development.
Cross River is today regarded one of the most developed and new tourist
destinations in Nigeria.
One big task for the Corporation is the sharing of powers and responsibilities
with such active State Governments such as Cross River and Lagos States
especially with regards to registration of hotels and the power for collection
of registration fees and power to close down establishments for non
compliance of registration requirements.
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6. METHODOLOGY
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7. OBSERVATIONS AND DISCUSSIONS
* Better part of the travels are for the purposes of business, Visiting
Friends and Relatives (VFR), religion, health and pleasure/holidays;
* That accommodation facilities are found in what ever part of the towns
with most of them having limited or no practicing laws adhered to;
* That hotel and Restaurants businesses are the most lucrative due to non
regulation aside petroleum oil with minimal overhead cost to bear;
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While the volume of hospitality operations in the country is appreciated with
regards to investment and the multiplier effect witnessed from the industry,
the need to regulate the various sectors can not be over emphasised. At the
governmental and administration level, one core organization responsible
for tourism operates under the only recognizable Act is the Nigeria Tourism
Development Corporation. Others related laws are those of Bar and Liquor
License and the Hotel Proprietors’ Act and Innkeeper’s Act.
In the works of Agbu (2008) ‘The Hospitality Franchise Agreement: A tool for
Investment Promotion In Nigeria’ Website Paper on line
www.google.com/hospitality franchise, other organisations which are foreign
and acting under the management contract laws are the major franchise
companies which undertake management contracts for hotel properties as
an additional or supplemental system to their existing systems of franchise
arrangements. Major chains like Hyatt, Sheraton and Hilton operate
hundreds of properties under management contracts in Nigeria and other
countries.
The use of the management contract has proven very successful to major
chains as a means of rapidly expanding their operations with far less
investment than direct ownership requires. With expertise in franchise
operations, financial management, and staffing, marketing, sales, and
reservation services, the chain operator in Nigeria has an advantage over an
independent company in seeking management contracts. The operating
environment would make, for instance, the cost of marketing and
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reservation services per property lower for the chain operator, based on the
information distribution network and economy of scale.
The hospitality Industry in Nigeria under a privatized economy and with the
return of a democratic system of government has become an investor’s
delight as more properties spring up in the major cities of Nigeria and the
demand for standardized accommodation by discerning guests and patrons
continues to grow. As witnessed in the fast foods restaurant business, it will
not be long before strong locally developed brands begin to sell their
franchises and with that their managerial competence to other hospitality
establishments in the country and the West African sub-region *2 * 3.
The situation that is found under reforms in the legal environment for
hospitality franchises are that at the first instance, there is the issue of
antitrust or anti competition in place. This is also reflective of Nigeria where
such transactions abound like the Hilton franchise matter.
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violation of antitrust laws. It is therefore of urgent importance for the legal
regime that supports a burgeoning franchise system of doing business that
antitrust laws be put in place. The Bureau for Public Enterprises (BPE) has in
the past years championed the call for a Competition/Antitrust laws in
Nigeria, but the efforts are yet to result in the enactment of a
law(BPE:2003).
Until the enactment of such a law, the following activities that restrain
competition in the Nigeria’s hospitality industry will remain unaddressed.
These are in respect of the following:-
* Until there is specific legislation to provide for these issues it will not
be possible to draw the distinction between activities which are per se
violations and those which are subject to the rule of reason: i.e. these
activities are not always illegal, but rather their benefits (such as economic
activity) are balanced against their anticompetitive effects in a particular
case. Where the benefits outweigh the negatives, the activity will be
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permitted, but where the impact is too great, the activity is forbidden by
law.
The intellectual property laws are governed by the Copyright law, the Patent
and Design Act, and the Trademarks Act .In international relationships, the
international conventions and other regulations of international origin are to
be taken into account. Franchisors are particularly very protective of their
trademarks since the trademarks are the centre of their licensing
agreements and the basis of their profitability. They are of fundamental
importance. Trademark Infringement may take the form of using recognized
marketing strategies, or capitalizing on the franchised name, if only by
changing slightly or copying other aspects of the franchised company’s
products and services.
It is also that recently, all the intellectual property rights legislation has
been compiled into one, to be known as the Intellectual Property Laws of
Nigeria. To consolidate on this development, the Nigeria Government has
also considered the adoption of a single institutional framework called the
Intellectual Property Commission of Nigeria (IPCON) to administer the
Intellectual Property Laws under one body. It will be stating the obvious to
say that soundness, certainty and uniformity in the legal regime of
intellectual and industrial property will certainly inure to the benefit of a
virile franchise regime in a healthy and investor-friendly commercial law
environment.
In this regard NOTAP seems to have partially filled the vacuum created by
the absence of antitrust/competition laws in our legal environment as most
of the specifications listed in Section 6(2)(a) -(r) are aimed at protecting
Nigerians entering into agreements for transfer of foreign technology.
Consider the following specifications: -
The situation here is that the provision represents the main disadvantage
stated in the Act for non-registration with NOTAP by owners of foreign
franchises wishing to do business with Nigerians. There appears to be no
sanction for non-registration.
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only a few States have attempted to regulate franchising. Such attempts
have been in the area of domestic franchising and not in international
franchising which is more related to the subject of transfer of technology.
Section 4(2)d Under the NTDC Act state, the Minister with the approval of
the President of the Country was empowered to make regulations in
particular requiring the classification or grading of hotels, restaurants and
night clubs and prescribing standards for their upkeep.
Unfortunately, the NTDC has met with some resistance in its attempt to
implement the provisions of the Act. Much of the opposition has arisen from
the fact that Tourism as a distinct item is not provided for in the Constitution
of the Federal Republic of Nigeria (1999), thereby creating a doubt at to
whose responsibility it is between the States and the Federal Government to
regulate Tourism and by extension Hospitality and Tourism establishments
in the Country.
The most crucial step in reforming the Tourism Sector will be to give it
constitutional legitimacy by making the necessary amendments and
defining the roles of the legislative houses. And there will be nothing wrong
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in fashioning a legal framework that is Nigeria to suit the Government’s
avowed quest for increased tourist arrivals in Nigeria and corresponding fall-
out of a proliferation of small fast food business franchises.
The recent Tourism Master plan which is to point the way forward, perhaps
as a result of the little or non-involvement of experienced Nigeria based
Industry Lawyers in its making regrettably fails to envisage, except for a
cursory mention of the splitting of roles between the federal and State
agencies, the legal and regulatory framework necessary for the realization
of the various recommendations and action plans set (NWLR PT264 AT 487;
NNTDMP: 2005).
There is furthermore, the franchise disclosure Laws which also have
bearing on the franchise operations in Nigeria. Question often asked is to
how a Solicitor rendering his professional services in an environment where
the Companies selling franchises are not open and honest in the description
of their offerings evaluate and actualize the purchase of a franchise for his
client. Potential franchisees legal and financial advisers would have to
envisage and perhaps answer in the unfolding Nigeria franchise
environment where no disclosure laws have been passed requiring
franchisors to disclose detailed information about their businesses.
The experience of Nations that have now passed both Federal and State
laws requiring franchisors to disclose detailed information about their
businesses before accepting the franchisee’s money is one the nascent
Nigeria franchising sector can learn from.
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Litigation history;
Bankruptcy history;
Description of franchise;
Financial arrangements;
Restriction of sales;
Site selection;
Training programs;
A franchisor that provides false information faces both civil and criminal
penalties including compensation in damages, jail, and fines. It is to be
noted that the constituent States in the United States are at liberty, in
addition to the adoption of similar rules, to impose different or more
stringent requirements upon the franchisors operating in such States.
FRAMEWORK
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9. PROSPECTS OF ENHANCING AND ENFORCING REGULATORY
FRAMEWORK
The prospects of enhancing and enforcing the regulatory framework for the
industry include the following:-
* The existence of the hospitality market and high demand for the
services;
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10. CONCLUSION
The inadequacies in the regulatory laws are another area that needs to be
visited.
Dependence on old laws do not mean well for the industry given the strive
to improve on the quality of services in the country as a tourist destination.
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11. RECOMMENDATIONS
iii The feud between the NTDC and some tourism friendly States should
be resolved through the intervention of the Stakeholders of the
industry.
iv. The role of NTDC and its scope seem too wide. The law should be
amended and the Corporation reorganized. That while a new agency such
as a Hotel Boards or Hotel Inspectorate should be created with function
bordering on licensing of hotels and inspections be handed over to it while
NTDC concentrates on either tourism development or marketing per se.
REFERENCES
Pub. p.100.
Barth, (2001). Hospitality Law. New York: JW& Sons Inc. P.64.
Burkart, AJ and Medlik, S. (1980). Tourism Past Present and Future. London:
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Pitman
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4(2)(d).
F. Zeidman..
United States of America, (1890). Sherman Act. USCASS 1-7. Govt. Press.
Master Plan.
Websites
http://www.google.com/hospitality regulations.
http://www.yahoo.com/hotel acts/laws.htm
www.WorldThinkTank.net/wttbbs.
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