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Wednesday, March 22, 2023

Ikeja Hotels Plunges into Losses as Lagos Seeks to Revoke Land Title

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Ikeja Hotels Nigeria Plc followed its peers in the hospitality business in witnessing a staggering loss, no thanks to the coronavirus pandemic.

This comes as the company could incur huge impairment on assets if the state government succeeds with revocation of a landed property.

For the first six months through September, Ikeja Hotels recorded a net loss of N1.40 billion from a 2019’s net income of N429.12 million as at September 2019.

Revenue declined by 60.11 percent to N3.60 billion as at September 2020, and a breakdown of top line figures shows revenue from Rooms fell by 62.06 percent to N2.09 billion from N5.51 billion the previous year.

Ikeja Hotel said the protracted deteriorating financial conditions could hinder its ability to reward its owners from distributable profit.

In addition, the Company received a letter dated October 15, 2020 from the Lagos State Government, purportedly revoking its right of occupancy on its land situated at Opebi Gorge, Ikeja, Lagos.

The Company has taken legal action to contest this revocation. However, the revocation has the potential to impair the assets of the Group to the tune of N4. 63 Billion if the government succeeds.

The hotel, travels and hospitality industry felt the pang of the economic crisis caused by the coronavirus pandemic that forced the government to impose a lockdown policy to curb the spread of the virus.

During the stay at home period, companies lost significant revenue because flights were grounded to a halt while customers were not able to hit the bar.

Ikeja Hotel is no longer making money from its core operations as it has posted an operating loss of N760.42 million in the period under review from a profit N1.33 billion the previous year.
A second wave of coronavirus pandemic has forced some governments in Europe to re-embrace lockdown measures, which means the future is bleak for operators in the Travel, Hotel, and Hospitality industry.

Ikeja Hotels is also struggling with deteriorating cash flow that cast a pall over the company’s ability to meet its obligations.

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