CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
The establishment of hotels and recreational centers in Nigeria both small scale and large scale has ultimately helped in the socio-economic development of the country. For this development that has been as a result of the building and establishment of these hotels to be lasting, the challenges confronting the small scale hotels in Nigeria has to be limited as negligence of these challenges may lead to the shutting down of the already existing ones thereby discouraging entrepreneurs from investing this profitable niche of business known as the hospitality sector of Nigeria. The Small and medium scale enterprises have long been recognized as an instrument of economic growth and development in Nigeria. This growing recognition has led to the commitment of World Bank group on Small scale hotels sector, as core element in its strategy, to foster economic growth, employment and poverty alleviation.
The World Bank group in 2004 approved roughly $2.4 billion in support of Micro, Small and Medium Enterprises (World Bank, 2001).The Small scale hotels have been given due recognitions especially in the developed nations for playing very important roles towards fostering accelerated economic growth, development and stability within several economies. Several researches have been conducted on the prospect and challenges of Small scale hotels in Nigeria and abroad as Small- and medium-sized enterprises (Small scale hotels) have long been believed to be important in supporting economics development within a country (see Akhtar & CDASED, 1999; Mazzarol, Volery, Doss, and Thein, 1999; Al-Shaikh, 1998) while others such as Chukwuemeka (2006), Agwu and Emeti, (2004), Arinaitwe (2006), Lundström (2005), Oboh (2002), Okpara (2000), Wale-Awe (2000), Ihyembe (2000), Bruch and Hiemenz (1984), Binks and Ennew (1996), Baumback (1983); and a host of others have observed various factors or challenges that impedes the performance of Small scale hotels ranging from inadequate finance, poor infrastructural facilities, inadequate managerial skill, weak and instability of government policies and other presumed factors and challenges causing premature death of Small scale hotels as Beckman (1983) classified the problems as internal and external.
Many studies have looked at the respective factors that are germane to the success of Small scale hotels. Teoh and Chong (2008), Ding and Li (2010) argued about that lack of access to credit and managerial skills are the major obstacles to entrepreneurship development and that in a knowledge-based economy, the intellectual capital is gradually replacing the physical assets in modern enterprises. In the seminal work of Aschauer (1989), he finds that the provision of public infrastructure is a significant determinant of aggregate productivity of Small scale hotels.
Pointing to these different findings, it appears that empirical studies on the prospects and challenges of Small scale hotels are still largely inconclusive as the direction to which of these factors serve as prospects for Small scale hotels and those which are really challenges have not been properly identified. In tandem with the objective thrust of this study, none of these studies has observed the ranking of these challenges in order of their importance or the priorities on the Small scale hotels. The authors only argued on the presumed factors that affect Small scale hotels, that is why this study intends to look at factors that have the highest priorities or ranking order of importance using principal component of factor analysis; being the gap existing in empirical works. Apart from this introductory section, the remaining aspect of this study is divided into four other sections.
1.2 STATEMENT OF THE PROBLEM
Though, Small and Medium Enterprises (SMEs) in Nigeria have not performed creditably well and hence have not played the expected vital and vibrant role in the economic growth and development of Nigeria. This situation has been of great concern to the government, citizenry, operators, practitioners and the organized private sector groups like hotels. Recently, the governments at federal, state and even local levels through budgetary allocations, policies and pronouncements have signified interest and acknowledgement of the crucial role of the tourism sector of the economy and hence made policies for energizing the same. There have also been fiscal incentives, grants, bilateral and multilateral agencies support and aids as well as specialized institutions all geared towards making the SME sub-sector vibrant.
1.3 OBJECTIVES OF THE STUDY
The following are the aims and objectives of embarking on this study
1. To examine the challenges of small scale hotels in Uyo
2. To identify factors that can enhance growth of small scale hotels in Uyo.
3. To know if investors are confident of investing in the hospitality sector of Nigeria.
4. To know the magnitude of challenges confronting small scale hotels in Uyo.
5. To proffer solutions to the development of small scale hotels in Nigeria.
1.4 RESEARCH QUESTIONS
1. What are the challenges of small scale hotels in Nigeria?
2. What are the factors that can enhance the growth of small scale hotels in Nigeria?
3. What is the level of challenge confronting the hospitality sector in Nigeria?
4. What are the solutions to the development of small scale hotels in Nigeria?
1.5 RESEARCH HYPOTHESES
H0: The challenges of small scale hotels in Uyo are low
H1: The challenges of small scale hotels in Uyo are high
H0: Small scale hotels do not impact on the economic status of Nigeria
H1: small scale hotels impacts on the economic status of Nigeria
1.6 SIGNIFICANCE OF THE STUDY
Assessing the challenges of small scale hotels in Nigeria would help highlight the challenges confronting small scale hotels in Nigeria with a view to tackling such challenges so that investors can be confident enough to invest in the Nigerian economy which would at the long run help in the socio economic development of Nigeria.
1.7 SCOPE OF THE STUDY
This study is on the assessment of the challenges facing small scale hotels in Nigeria. With Tevoli hotels Uyo as the case study.
1.8 DEFINITION OF TERMS
Hotel: An establishment providing accommodation, meals, and other services for travellers and tourists, by the night.
Infrastructure: The basic physical and organizational structures and facilities (e.g. buildings, roads, and power supplies) needed for the operation of a society or enterprise.
Economy: The state of a country or region in terms of the production and consumption of goods and services and the supply of money.

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