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Monday, March 27, 2023

Transcorp Hotels Revert to Profit as Room Bookings Surge

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Transcorp Hotels is profitable and business is booming once again as holiday bookings surged following the reopening of the economy and successful rollout of vaccines.

Investors are betting that the sustainability of the economic recovery buoyed by a rally in crude oil price and political stability will bolster hotel occupancy and make hospitality stocks attractive.

Transcorp Hotels posted a profit after tax of N742.01 million in September 2021 from a loss of N5.49 billion as at September 2020.

Revenue followed the same growth trajectory as it spiked by 115.02 percent to N14.60 billion in September 2021 from N6.79 billion as at September 2020.

A breakdown of the top line shows revenue from rooms-which make up 63.15 percent of Group revenue- surged by 113.92 percent to N9.22 billion in September 2021 from N4.31 billion the previous year.

The beverage segment saw revenue grow 141.46 percent to N3.96 billion as at September 2020.

The company posted operating profit of N3.83 billion in September 2021 from a loss position of N1.19 billion as at September 2020.

Last year, the hotel industry was the hardest hit from the coronavirus pandemic that forced the government to impose a sit-at-home order that crippled economies.

Airlines were grounded and tourism was in a state of comatose, forcing companies to lay off workers so as to stay afloat, while some jettisoned dividend payment to conserve cash.

Now the hotel and hospitality industry are showing signs of life and have recovered from the coronavirus pandemic since the start of the year as crude oil price rebounded while a relaxation of social distancing measures and vaccines rollout pave the way for the skies to be free again for planes to fly.

The Nigerian economy grew by 5.01 percent year on year (yoy) in the second quarter (Q20) 2021, according to latest data from the National Bureau of Statistics (NBS).

The International Monetary Fund (IMF) says Nigeria’s economy will grow by 2.6 percent in 2021, up from 2.5 percent earlier projected.

Total traffic in the second quarter (Q2) ‘21 stood at 3.2 million passengers, representing an increase of 9 percent quarter on quarter and 72 percent year on year, according to data from the National Bureau of Statistics (NBS).

Transcorp Hotel has enough to make interest payment on its debt, and it is not beleaguered with external borrowing. It has an interest coverage ratio of 1.24 times, which is higher than the 1.50 times benchmark.

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