The December festive season in Nigeria, colloquially termed “Detty December,” has evolved from a cultural phenomenon into a critical economic window for the nation’s services sector. In December 2024, despite headline inflation climbing to a 28-year high of 34.8% and significant currency volatility, the hospitality and entertainment sectors in Lagos demonstrated remarkable revenue resilience, generating an estimated $71.6 million (₦111.5 billion) within four weeks. Higher revenue is anticipated in 2025, underpinned by the crystallisation of a fundamental structural shift in the operating model of Nigeria’s hospitality sector.  We believe the sector has adapted to a high-cost, high-risk operating environment by shifting towards a premium, dollar-denominated consumer base. However, this shift raises fundamental questions regarding the long-term sustainability of the festive economy. Current trends suggest an increasingly segmented market, with activity now driven mainly by diaspora spending and emerging foreign tourism, while domestic mass market participation declines and political risks loom.

Macroeconomic Context: The Adjustment to Higher Operating Costs

To grasp the outlook for the 2025 festive season, it is essential to examine the transition from the disruptive economic shocks experienced in 2023 to the solidified cost frameworks defining the current year. The removal of petrol subsidies and the liberalisation of the foreign exchange regime in 2023 initially introduced significant volatility. However, by late 2025, these elements have been fully calibrated into the baseline cost of doing business, resulting in higher costs for diaspora visitors.

Furthermore, security challenges, particularly banditry, in many parts of Northern Nigeria have evolved into a persistent commercial risk. Consequently, the premium paid for security has migrated from a variable contingency cost to a fixed line item in corporate budgets. For the hospitality and tourism sectors, this implies a permanent upward shift in the cost base. The resilience observed in business confidence, particularly within the services sector, is largely attributable to the ability of operators to pass these costs on to the consumer. However, this pass-through mechanism has a limit, effectively excluding the domestic mass market and concentrating demand within a narrower, more affluent demographic.

Logistical Constraints and Revenue Displacement

A critical enabler of the festive economy is the efficient movement of persons. In this regard, the structural deficit in Nigeria’s transport infrastructure acts as a significant cap on potential growth. The deterioration of safety on key interstate arterial roads has cast a significant shadow over road transport, traditionally the backbone of domestic festive migration. While overall passenger volumes remain robust, buoyed by continued demand and full occupancy on interstate bus routes, the prevailing insecurity has constrained potential volume growth.

This has triggered a substitution towards air travel, creating a demand surge that has enabled a 150%+ Yuletide fare surge to ₦300,000-₦400,000 one-way to some destinations, beginning in mid-December 2025 and ending by the second week in January 2026. Moreover, US dollar-denominated costs – encompassing aircraft leasing and maintenance, spare parts and insurance, aviation fuel, and regulatory levies – for Nigeria’s domestic airlines have imposed severe operational constraints. Many carriers now operate at 50-70% fleet capacity owing to prohibitive maintenance expenses, intensifying supply shortages.

The economic implication is a ‘crowding out’ effect. The lower-middle class, previously a key participant in the annual transfer of wealth from urban centres to the hinterlands, is increasingly priced out of air travel. Faced with road travel as the alternative, which remains accessible though less convenient, many consider foregoing travel altogether; potentially diminishing liquidity flows to rural economies and deepening urban consumption concentration.

Figure 1: Average Domestic Airfare (₦’ one-way)

Source: NBS,
*Agusto & Co. estimate for December 2025 for peak routes

 

Revenue Resilience amid Operational Fragility

The hospitality sector presents a compelling case study of revenue resilience masking underlying operational fragility. In prime locations such as Victoria Island and Ikoyi, hotel occupancy rates are projected to reach 85% during the peak of the season. However, headline revenue figures obscure the intense pressure on margins.

Operators are currently grappling with what effectively amounts to a “double infrastructure tax.” Firstly, the reliance on diesel generation remains acute. With the price of petrol and diesel settling at elevated levels following subsidy and exchange rate reforms, energy costs have surged. Secondly, the security imperative has necessitated increased spending on private security arrangements, including surveillance technology and secure logistics. As at Q1 2025, energy and security-related operating expenses were estimated to constitute between 15% and 18% of total overheads for premium establishments, a substantial increase from historical averages. These costs, tied to imported inputs (diesel, security hardware, maintenance equipment), are systematically passed through to consumers via premium pricing.​

This pass-through mechanism erects natural barriers to entry, confining competition to operators equipped for high-cost operations and concentrating demand among affluent diaspora. In the absence of these infrastructural constraints, revenues might contract due to lower pricing and heightened competition, underscoring that current elevated figures reflect cost absorption rather than pure volume expansion. Thus, the sector operates within a high-revenue framework where margins hold steady through cost pass-through, yet structural inefficiencies impose a growth ceiling by limiting broader market penetration and capital accumulation for expansion.

Supply Inelasticity and the Alternative Accommodation Market

A notable development in the accommodation sub-sector is the widening gap between the formal hotel pipeline and actual room delivery. While Nigeria ostensibly has a robust pipeline of 7,320 hotel rooms (ranked third in Africa), the execution rate is hampered by high financing costs and the volatility of construction material prices.

Into this supply vacuum, the short-let apartment market has expanded rapidly, capturing an estimated 20% of total accommodation revenue in the 2024 season. This segment offers a rapid-response mechanism to demand spikes, particularly from the diaspora. However, this unregulated growth exerts significant pressure on existing residential infrastructure. Residential areas are increasingly required to support commercial-scale power and water demand, resulting in the accelerated deterioration of infrastructure. Furthermore, the short-let market is not subject to the same regulatory oversight or security standards as formal hotels, introducing a layer of reputational and safety risk to the wider tourism brand.

Foreign Exchange Liquidity and the Diaspora Anchor

The sustainability of the Detty December economy in its current form is heavily reliant on external liquidity. The significant depreciation of the Naira since 2023 has created a favourable arbitrage opportunity for the diaspora and expatriate community. For diasporans, the relative cost of luxury consumption in Nigeria has decreased, even as nominal Naira prices have surged.

Remittance inflows, as monitored by the Central Bank of Nigeria (CBN) and the Nigeria Inter-Bank Settlement System (NIBSS), surged from $100 million monthly in Q3 2023 to $600 million monthly by Q3 2025. Projections indicate sustained year-on-year growth into Q4 2025, bolstering high-end sectors such as real estate, dining, and entertainment. This creates a situation where, on the one hand, recessionary pressures erode domestic earners’ purchasing power, and, on the other hand, dollar-holders sustain buoyant markets. Although such inflows deliver vital short-term liquidity for operators, they heighten vulnerability to external shocks, including Naira appreciation or diaspora income contraction, which could disproportionately impair revenue forecasts.

A Looming Stress Test: The 2026 Pre-Election Outlook

Looking ahead, the sector’s structural reliance on external liquidity constitutes a critical vulnerability for the 2026 season. With the 2027 General Elections scheduled barely two months after Detty December 2026, a marked decline in diaspora arrivals is expected. In periods of heightened political uncertainty, the risk appetite of the “IJGB” demographic typically wanes, leading to a significant decline in arrivals. In the absence of this vital dollar inflow to offset the substantial costs associated with security and diesel – effectively a heavy “Security Tax” – the experience economy risks a severe liquidity shortfall. This scenario would serve as a severe stress test, likely collapsing the occupancy rates of premium hotels and bursting the speculative bubble in the short-let market, exposing the fragility of a sector that lacks a robust domestic demand base.

Looking Ahead

Under macroeconomic pressure, the “Detty December” phenomenon has recalibrated. The market has segmented, with operators successfully courting the high-value, security-conscious elite while the mass market largely recedes into the background. This necessitates a cautious outlook on the long-term structural viability of this model. For the festive economy to transition from a seasonal cash cow into a sustainable engine of diversification, policy must address the fundamental unsustainability of its current liquidity model, mitigating both the “double infrastructure tax” and the looming political risk that threatens its very existence. Until these structural deficits are bridged, Detty December will remain a brilliant but gated anomaly – a VIP section thriving in isolation, disconnected from the broader developmental needs of the nation.