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Tuesday, March 28, 2023

Nigeria Hotels Profit Nearly Doubles to Pre-Pandemic Level

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Gross operating profit for Nigerian listed hotels has nearly doubled when compared to 2019 levels, according to data gathered by MoneyCentral.

The relaxation of the lockdown policy imposed by the government to curb the spread of the coronavirus pandemic that underpinned hotel bookings helped overall profitability levels as there has been a marked improvement in conferences, group meetings, lounging.

The three dominant players in the hotel and hospitality sector-Transcorp Hotels Plc, Ikeja Hotels Plc, and Capital Hotels Plc- collectively grew gross profit by 76.85 percent to N13.06 billion in June 2022, according to data gathered by MoneyCentral.

That compares with combined pre-pandemic gross profit of N8.73 billion profit in 2019, a pre-pandemic period. And perhaps more interesting is that the 2022 figure is significantly higher than N763.12 million for 2017.

Interestingly, they collectively posted a net profit of N1.83 billion in June 2022, from a loss of N439.04 million in 2021 as companies were recovering from the impact of the coronavirus pandemic on their operations.

Transcorp, Hotel, Ikeja Hotel, and Capital Hotel, collectively generated N13.01 billion in revenue from rooms, which represents 75.67 percent increase from 2021’s N7.40 billion, according to data gathered by MoneyCentral.

Chairman of Ikeja Hotel, Anthony Idigbe, attributed the positive performance to the growing occupancy return to pre-COVID-19 levels, in addition to enhanced business strategies and aggressive cost management efforts.

The hospitality industry was one of the hardest hit from the pandemic that killed millions across the globe and significantly undermined economies.

In the first two months that the global lockdown went into effect, the Nigerian travel industry lost more than N180 billion and thousands of jobs, according to Bankole Bernard, Chief Executive Officer of Finchglow Travels Limited/FC Nigeria and former President, National Associations of Nigerian Travel Agencies (NANTA).

Analysts say the hotel and hospitality in Nigeria has never faced a crisis that brought travel to a standstill, including the Ebola virus outbreak of 2014 and the recession of 2015.

The virus headwinds forced the largest hotel firm by market capitalisation Transcorp Hotels into taking restructuring measures such as the suspension of acquisition and investment in fixed assets and operating equipment as well as reducing our energy consumption and maintenance costs.

As the virus’s spread is contained, and the economy recovers slowly, sector players landed in positive gross profit per available room.

For instance, Transcorp Hotels gross profit per available room stood at N1.13 at June 2022, which, however, lower than N1.15 of 2021.Revenue per available room stood at N1.55 in the period under review, according to MoneyCentral calculations.

Capital Hotels’ gross profit per available room hit N0.213 in the period under review from N7.18 the previous year; revenue per available room stood at 2, which is lower than 2021’s N2.03.

Ikeja Hotels’ gross profit per available room increased to N0.92 in the period under review from N0.752 the previous year. Revenue per available room jumped to N3.47 in June 2022 from N3.23 in 2021.

Revenue per available room (RevPAR) is a performance measure used in the hospitality industry. RevPAR reflects a property’s ability to fill its available rooms at an average rate. An increase in a property’s RevPAR does not necessarily mean greater profits.

Nigeria’s Gross Domestic Product (GDP) grew by 3.11% (year-on-year) in real terms in the first quarter of 2022, indicating the sixth consecutive quarter of positive growth by the Nigerian economy.

Hotels in Africa’s largest economy that will boost their operations and deliver sustainable returns to all stakeholders.

They are also investing in new businesses and asset-light initiatives that leverage technology to increase their footprint across the continent.

“We have also engaged in other strategic and cost-optimisation initiatives across both our hotels in Abuja and Calabar, as we increase focus on our leisure and staycation business segment,” said Dupe Olusola, managing director and CEO of Transcorp.

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