COVID-19 lockdown ruptures Transcorp Hotels’ profit margins
... as losses hit N1bn a month
Covid-19 pandemic has hit businesses around the world and Nigeria is not left out. Hospitality giant
Transcorp Hotels Plc is not left out and is losing more than a billion naira a month as a result of the coronavirus induced lockdowns imposed by the Federal Government. It may likely also lay off some staff as it is operating at below 30 percent occupancy ratio with a forecast that does not see a rebound to pre-covid levels of operations until at least 2024.
The company, which owns two hotels including the flagship Transcorp Hilton property in Nigeria’s capital, Abuja, has been paying salaries of employees despite the lockdowns and hit to business, according to managing director/ceo, Dupe Olusola.
“We paid 100 percent of salaries for March, April and May and struggled not to let go of any staff, despite the lockdown imposed on the hospitality business by the government,” Olusola said in a press briefing yesterday.
“We have however reached a time critically where you cannot continue.”
Transcorp has been facing mounting losses of N1 billion a month since March as flights and hotel bookings get cancelled due to the pandemic.
The hotel has engaged with the government on possible palliatives to no avail, according to Odusola.
“We have engaged on tax rebates and possible support for our employees and are left with no other choice.”
Transcorp may lay off up to 40 percent of current staff as a result of the crises.
Its main banquet hall in the Abuja Hotel that could hold up to 1,000 people is now mandated by law to entertain only 250.
“The business continuity and survival is what we seek now,” Odusola said.
Transcorp is raising N10 billion by way of rights issue to strengthen its balance sheet. It is also seeking interest reduction from the Bank of Industry (BOI) on existing loans to help tide it through the rough patch.
“We have put a temporary halt to our hotel expansion plans in Lagos and Port Harcourt,” Odusola said.