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COVID-19 takes a toll on hotels
By ADEBAYO OBAJEMU
COVID-19 pandemic has significantly had its toll on global economy among the most affected sectors are hospitality and aviation sectors. In Nigeria, these two sectors hard-hit have repeatedly made passionate pleas to the government to come to their aid.
Even, in spite of gradual easing in the country of restrictions, the hospitality industry continues to suffer the effect of the COVID-19 pandemic. It felt the impact when the Federal Government shut the economy in April, as it asked all businesses in Abuja, Lagos, and Ogun States to lock up.
Only essential services providers were exempted from the restrictions, as we would have it, hospitality industry is not considered among essential services providers. In this wise, hospitality providers were asked to close shop temporarily, but for the few that were used as isolation centres, as the sector is considered as a major vector in its transmission.
It is pointless to say that the adverse effects of the shutdown were huge. Revenue suffered, even as many hotel workers were laid off. BusinessHallmark’s findings show that all of the three Nigeria’s biggest hotels listed on the Nigerian Stock Exchange have suffered revenues losses.
This is clearly borne out by their latest earnings reports, which have shown the extent of the lockdown’s impact on their financials. These hotels are Transcorp Hotels Plc, owners of Transcorp Hotels in Calabar, Port Harcourt, and Ikoyi. The others are Ikeja Hotel Plc, owners of Sheraton Lagos Hotel and a significant shareholding in Tourist Company of Nigeria Plc, (owners of Federal Palace Hotel & Casino Lagos), and Capital Hotel Plc, owners of Abuja Sheraton Hotel.
Recall that Transcorp Hotels, in the quarter ended June 2020, its room revenue significantly dipped by N3.03 billion compared to the N5.88 billion in the same period in 2019.
It should be note that business and commercial activities in the nation’s commercial capital, Lagos were grounded to a halt between the months of April and May following the imposition of restrictions by the government in a move to battle the spread of the Coronavirus.
Though, there has been gradual relaxation on restrictions in June, nevertheless, economic activities in most parts of the economy remain low and minimal.
Ikeja Hotels
As at the time of this report, Ikeja Hotels Plc was yet to release its second-quarter result, the revenue loss-signs were everywhere visible, as it declared a revenue loss in its quarter ended in March 2020. This was prior to COVID-19. Room revenue fell to N1.56 million compared to N1.65 million posted within the same period.
The company’s revenue also showed a huge dip, when it fell to N1.59 million in 2019 to N1.61 million as at the end of March 2019. But this did not affect the Profit after Tax of the Group, which rose to N252.54 million from N130.13 million in 2019.
The same pattern of loss is also observed in The Capital Hotels Plc’s 2020 second-quarter results which showed that its revenues declined by 88% compared to the same period in 2019. The company reported a loss of N235 million in the quarter. In the second quarter, which is the period April to June 2020, it posted revenue of N142.3 million compared to N1.18 billion in the same period in 2019.
An observer could easily come to the conclusion that its latest result is perhaps, one of its worst quarters on record even as the first quarter of 2020 produced revenues of N993 million. Room revenues were only N64.3 million in the quarter ending June 2020 compared to 502.7 million in the quarter ending March 2020.
We can still recall the history of the company in the last couple of years. Abuja Sheraton has been a shadow of itself for years, as its owners sought to recapitalize. However, the huge demand for hotel accommodation in the nation’s capital has helped the company deliver revenue growth.
The company’s revenues have risen from N4.69 billion in 2015 to as high as N5.9 billion in 2018. However, Revenue fell to N5.1 billion in 2019. For Accor group (French run), it has very difficult and challenging period. This newspaper learnt that the hotel has shut down two of their hotels; Moore House Ikoyi and Ibis at Ajao Estate).
The implication is that there has been massive job loss, as all the staff in the hotel have been sacked. At Ibis hotel, only two staff are left, as everyone was asked to go. They are reportedly hoping to reopen that one next year.
At the popular Jaguar hotel at Ijoko, a seven minutes drive from Sango, it was a sad moment, according to John, one of ex waiters at the hotel, “when the management asked all staff to leave, in the guise of repositioning.”
“By May, our rooms which used to be filled to the brim started witnessing few and few guests. Before we were asked to go in early June, there had been 85 percent drop in revenues,” John told this newspaper.
Any silver lining
Dare Akande, manager in charge of the Boat, a three star hotel at Command said “it will take time for the industry to come to life again.”
“You Know, this lockdown and pandemic has affected both macro and micro levels of the economy, right now many people are concerned with basic essentials, so in the scale of preference of many, this industry would come last.”
Managing Director of W Hospitality Group, Trevor Ward, said that the industry would be on the part of recovery once the borders and skies are reopened. He said:
“Whilst countries like South Africa and Kenya can look to the domestic market for demand, as they can drive to hotels, in Nigeria we rely on air travel for our domestic and international guests, so without flights, no guests.
“Then, there is the fact that for many cities in Africa the demand is almost entirely commercial and/or government, and unheard-of reductions in GDP, and therefore corporate and state incomes, means there will be a reduction in demand from those sources. “Soon”; No, I don’t believe it will be soon, but then the resilience of Africa and the Africans is legendary, and a return to growth is not so far away.”
Irrespective of how long it will take the industry to survive the pandemic and its effects, like other industries, it is important for operators to look inwards and re-engineer the processes to cut costs, and look outwards to customers, maintain contact, inform them about the steps being taken to ensure their safety when they return.
