At a virtual press conference yesterday, Managing Director and Chief Executive Officer of Transcorp Hotels, Dupe Olusola, said the hotel recorded a drastic decline of over N9 billion revenue since period of lockdown and a loss of N4.9 billion.
She said the hotel recorded losses of N456 million in March; N1 billion in April, and N1 billion in May.
She noted that it was a tall order for the management to continue to operate as a hotel with a payroll cost of over N2 billion and operational cost at N4.1 billion monthly.
She disclosed that the hotel had engaged actively with the labour unions in the sector with stakeholders and employees to see reasons on their decision.
“The board met and decided it could no longer continue to run the hotel business with such significant losses. We concluded it was important we carried all our stakeholders along. We ensured we were able keep the hotel of over 30 years of existence in operation.
“We have about 1,200 workers and we do not want to send all of them home. We continued to pay our staff 100 per cent in March and April. In May, we made the decision to pay 100 per cent to those working and 50 per cent to those not working.”
She said the hotel has not benefited in palliatives from government but has engaged with government in dialogue on what could be done for them in terms of tax exemption, supporting the staff and palliatives for the sector.
When asked on the occupancy level since the resumption of international flights, she said: “Even with resumption of flights, it has not positively affected us on increase in occupancy on our rooms. Presently, we not seen increase above 17 per cent. We are still recording very low room revenue, we have struggled to open our outlets. International travellers have been slow.”
She stated that the outlook for the hospitality business in Nigeria looked bleak, weakenening the financial position of hotels at the end of 2020 due to the COVID-19 pandemic.
She added that the company waas working on cost optimisation and survival strategies to ensure it stays in the hospitality business.
Olusola explained that the pandemic has affected many sectors of the Nigerian economy, adding that one of the hardest hit is the hotel industry.
According to her, the industry 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.
“It is expected that recovery levels globally will be at 2024 and it is not surprising because government policies which involve the health practice of wearing masks as well as practising social distancing will come up. People are slowly coming to terms that the pandemic happened and so people are re-thinking different business models. There has been a slight increase in economic activities, however, we are struggling to operate as we used to.
In the quarter ended June 2020, Transcorp Hotels’ room revenue fell to N3.03 billion compared to the N5.88 billion in the same period in 2019 while our losses have been on a month-to-month basis at over N1 billion. Hence, we will be in a loss position at the end of 2020 as we are deeply challenged and we can only hope a vaccine will be found to drive out the pandemic”, She said.
When asked on how the hotel intends to sustain its business, Olusola, said innovation and adaptability was key to sustaining the hotel business.
She said the firm was working on cost optimisation as well as survival strategies to ensure its sustainability and look at different initiatives in the next financial year.
She revealed that the company would consider raising N10 billion in form of rights issue in order to strengthen its balance sheet.
“One of the key things we did was engage with our lenders to see how we can get loan reductions in our interest loans and we got positive responses from some of them. We are considering raising N10 billion in form of rights issue in order to strengthen our balance sheet. We are a strong organisation and we are optimistic and we are working on a day-to-day basis to bring innovative solutions to our customers”