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Monday, March 27, 2023

Transcorp Hotel Surmounts Coronavirus Headwinds as Operating Profit Surges 

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Transcorp Hotel Plc has overcome the coronavirus crisis that grounded the hospitality industry to a halt last year as the company is able to generate profit through its core operations.

The company’s operating profit margins increased to 20.63 percent in March 2020 from 15.82 percent the previous year,  according to MoneyCentral calculations.

A higher ratio means a firm is good and efficient in turning sales into profit, and such operating earnings can cover exceptional items such finance costs and foreign exchange losses.

Operating profit followed the same growth trajectory as it spiked by 23.98 percent to N819.16 million in March 2021 from N660.68 million the previous year.

Analysts prefer to use the operating income to gauge the profit position of a firm compared to the net income because the former is not susceptible to window dressing.

This is because it is easier to tinker with the net income by manipulating inventories to reduce the cost of goods sold. But it is practically impossible to undermine cash as a monthly reconciliation is usually carried out.

Transcorp Hotels has cash from operating activities of N2.82 billion as at March 2020, which means it has the financial strength to pay dividend, meet its obligations, and fund future expansion plans.

The coronavirus pandemic disrupted the hospital industry in 2020 as hotels, bars, clubs, and recreational centers were shuttered by the government that had imposed lockdown measures to contain the virus

However, the gradual reopening of the business on the back of roll out of vaccines and a rebound of crude oil price helped lift the country out of recession.

And that is positive prognoses that Transcorp Hotels and peer rivals will revert to the path of robust earnings in 2021 as the relaxation of social distancing rules means people can converge for conferences and seminars.  Hotel bookings and accommodation will accelerate.

Aligning with expectations, the Nigerian economy expanded year on year by 0.51 percent in the first quarter of 2020, according to recent data from the National Bureau of Statistics (NBS).

Transcorp Hotels Plc launched  ‘Aura,’ a new digital platform through which people can book accommodation and other services offered by the organisation.

Aura, which is Transcorp’s first in the alternative accommodation segment, is part of the company’s asset-light model, leveraging technology to deliver true hospitality, exciting experiences, and drive shareholder value.

 “It’s a new dawn in the hospitality industry. I am thrilled to introduce you to Aura by Transcorp, the digital platform we are using to connect people to quality accommodation, great food, and awesome experiences,” said Dupe Olusola, Managing Director and Chief Executive Officer of Transcorp Hotels Plc.

“For more than 30 years, Transcorp Hotels Plc has been at the forefront of creating a superior guest experience at our locations. Today, our commitment to innovation has offered us an opportunity to extend this beyond the hotel premises,”  Olusola adds.

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