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Hospitality & Travel

Nigerian hotels count revenue losses due to pandemic-induced plunge

The hospitality industry continues to suffer the effect of the COVID-19 pandemic.

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Transcorp Hotel Plc

COVID-19 has affected many sectors of the Nigerian economy, and one of the hardest hit is the hotel industry. 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. Only the one offering essential services were exempted.

Unfortunately, hotels are not considered among essential services providers. For this reason, they were mostly shut down, except for the few that were used as isolation centres. Needless to say that the adverse effects of the shutdown were huge. Revenue suffered, even as many hotel workers were laid off.

READ MORE: Africa Prudential suffers revenue drop as Covid-19 bites contracts business

Pandemic bleeds Transcorp, Ikeja, Capital Hotels’ revenues

About three of Nigeria’s biggest hotels are listed on the Nigerian Stock Exchange. Their latest earnings reports have shown the extent of the lockdown’s impacts on their financials. These hotels are:

  • Transcorp Hotels Plc, owners of Transcorp Hotels in Calabar, Port Harcourt, and Ikoyi
  • 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)
  • Capital Hotel Plc, owners of Abuja Sheraton Hotel

Transcorp Hotels: 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. Business activities in the nation’s commercial capital, Lagos, grounded to a halt between the months of April and May after the government imposed restricted movements in a bid to combat the spread of the Coronavirus. Gradual easing commenced in June but economic activities in most sections of the economy remain subdued.

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READ MORE: Covid-19: Unilever Nigeria suffers 40% revenue loss

Ikeja Hotels: Although Ikeja Hotels Plc has not released its second-quarter result, the revenue loss-handwriting is already on the wall, as it declared a revenue loss in its quarter ended in March 2020. This was before COVID-19. Room revenue fell to N1.56 million compared to N1.65 million recorded within the same period. The company’s revenue also witnessed a drop, 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 Backstory: Nairametrics had reported Capital Hotels Plc’s 2020 second-quarter results which revealed that its revenues fell by 88% compared to the same period in 2019. The company reported a loss of N235 million in the quarter.

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In the second quarter, which is the period April to June 2020, the company reported a revenue of N142.3 million compared to N1.18 billion in the same period in 2019. Its latest result is 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.

READ ALSO: Under 40 children of billionaires sitting on the boards of mega quoted companies (2)

Abuja Sheraton has been a shadow of itself for years seeing as its owners seek 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. Revenue fell to N5.1 billion in 2019.

When will the industry come out of the woods?

Managing Director of W Hospitality Group, Trevor Ward,  explained 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.

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READ MORE: Loan: CBN disburses over N300 billion to SMEs, health, agric, manufacturing sectors

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“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.

Abiola has spent about 14 years in journalism. His career has covered some top local print media like TELL Magazine, Broad Street Journal, The Point Newspaper. The Bloomberg MEI alumni has interviewed some of the most influential figures of the IMF, G-20 Summit, Pre-G20 Central Bank Governors and Finance Ministers, Critical Communication World Conference. The multiple award winner is variously trained in business and markets journalism at Lagos Business School, and Pan-Atlantic University. You may contact him via email - [email protected]

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Hospitality & Travel

Arik, Dana Airlines to resume flight operations after curfew

Dana Air and Arik airlines to resume flight operations from Lagos airport tomorrow.

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Arik Air resumes flight schedules to Asaba after one-year break, Proposed Arik and Aero merger to form National carrier disapproved  

Dana Air and Arik airlines are set to resume flight operations from Lagos airport on Saturday, as the Lagos State government relaxed the 72-hour curfew imposed on the state.

The curfew was imposed by the State Governor, Mr Babajide Sanwo-Olu, on Tuesday to forestall further breakdown of law and order, following series of EndSARS protests.

READ: SAHCO, Arik Air renew contract to boost services 

Communications Manager, Arik Air, Adebanji Ola, in a statement issued on Friday, explained that flights across the country would operate as scheduled, and passengers were advised to arrive at the airport early to have ample time to complete boarding formalities.

He said, “Customers who could not use their tickets during the period of the curfew can modify such tickets at no extra cost.

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READ: Local Airlines tell staff to forget April salary

“The management of Arik Air thanks customers for their understanding while the cancellation of flights lasted.”

Also, spokesperson for Dana Air, Mr Kingsley Ezenwa announced that the airline was pleased to inform its passengers that the company would resume full flight operations from Saturday, the 24th of October 2020.

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READ: Chinese automobile maker, GAC Motors to set up assembly plant in Lagos 

He said, “The tickets purchased for flights within the period of the curfew remains valid and can be rescheduled for free by sending an email to us.”

Back story: Nairametrics reported earlier on Friday that the Lagos State Government had eased the 72-hour curfew which was earlier imposed on Tuesday, October 2020, to run from 6 pm to 8 am.

READ: Lagos to support owners of looted, vandalised stores

This was disclosed by Governor Babajide Sanwo-Olu, on Friday, October 23, during a press briefing at State House Marina, after a tour of the state to inspect the level of destruction of public and private infrastructure during the #EndSARS protests that later turned violent.

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This means residents can go out between 8 am and 6 pm, with effect from Saturday, October 24, 2020).

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Hospitality & Travel

Nigeria set to lose on latest Bilateral Air Service Agreements

Experts have explained why Nigeria is at the losing end of yet another Bilateral Air Space Agreement.

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Nigeria set to lose on latest Bilateral Air Service Agreements, United States announces changes to work permit visas that could affect Nigerians

It is no longer news that Nigeria signed Bilateral Air Service Agreements (BASA) with the United States, India, Morocco and Rwanda. However, who benefits more from the agreements has been a topical discussion amongst Nigerian stakeholders. Some of them, who spoke with Nairametrics in separate interviews, argued that the development would favour the partner countries more than Nigeria.

They argued that Nigeria has signed this deal with over 80 countries across the world, but has turned out to be disadvantageous to Nigeria. Most of the agreements are only beneficial to the countries and their foreign carriers, without any reciprocal benefits to Nigeria. This is allegedly due to the failure of the Nigerian representatives to put Nigeria’s interest first at the BASA negotiating table.

READ: CBN to sanction exporters who default on export proceed number

In most cases, Nigeria does not really benefit from the deal, especially with no National carrier or a domestic airline that has the required equipment to compete with their foreign counterparts.

Managing Director, Starburst Aviation Limited, Capt. David Olubadewo, who was once Nigeria’s youngest pilot, admitted that he has not seen the agreements. However, he told Nairametrics that the nation does not have the capacity/equipment to compete favourably with the countries it signed the deal with.

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READ: FG to inject over N198 billion on capital projects in power sector in 2021

Capt. Olubadewo said, “In most cases, BASA entails specific agreement between two partners, where parties involved will agree on exchange of flights. It could be 10 flights weekly from Country A and same from the other Country.

“So, if US for instance, has done 10 flights to Nigeria as agreed and Nigeria has not, it will not affect US in anyway.”

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In his own case, Muyiwa Lucas, another stakeholder in the industry, claimed that the aim of the international carriers and their countries is to make sure that indigenous carriers do not rise to compete with them on those lucrative routes like Lagos-London, Abuja-London, Lagos-Dubai, Lagos-Paris, Lagos-Amsterdam, and Lagos-Johannesburg.

READ: Nigeria, India to conclude Bilateral Air Services Agreement deal

In an interview with Nairametrics, he said that the partners are always quick to choose a favourable destination in Nigeria (Lagos and Abuja), while they dictate to Nigeria the airport to land its aircrafts in their countries.

Lucas said, “Nigerian flights are only allowed to drop passengers at Gatwick, which handled 46.1 million passengers in 2018. They don’t allow such in Heathrow airport, which is London’s main hub and also one of the world’s busiest airports with 80.1 million passengers in 2018.

“Arik Air was stopped from operating from Abuja to London, unless it paid for slot allocation, which cost a huge amount of money.

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READ: Nigeria, Ethiopia sign visa waiver agreement

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“But, while British Airways was and is still flying to Abuja, enjoying grandfather rights; Arik Air was paying for slots and when the Nigerian airline deemed that operation unprofitable, it stopped, leaving only British Airways to be operating to Abuja from London with minimum load factor of 85%.”

Lucas argued that while some of the countries introduced clauses to jeopardise Nigerian airlines operation to their countries, Nigeria rarely retaliated in the spirit of diplomatic principle of reciprocity.

READ: Just in: FG bars Air France, KLM and other foreign airlines

However, Pranjal Pande, an Indian Aviation Expert, sees the development from a different angle.

According to him, Nigeria is home to a substantial Indian expatriate population, and India sees thousands of yearly visitors from Nigeria but noted that the lack of direct flights has meant passengers fly mostly with Middle East carriers.

Pande said, “Popular routes from Delhi and Mumbai to Lagos are over 4,100 nautical miles, putting them out of the range of the current generation of narrowbody aircraft. This means that, from India, only Vistara and Air India, the only airlines with widebodies, could start flights to Nigeria. Neither airline has signalled intentions of doing so soon.

READ: Nigeria @ 60: The Aviation sector and its travails

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“It’s most likely that Air Peace will be the first to start flights to India. However, the timing remains up in the air due to the current crisis.”

Backstory: On October 6, 2020, Nairametrics reported that the Federal Government announced the signing of Bilateral Air Service Agreements (BASA) with the United States, India, Morocco and Rwanda.

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A copy of the agreement showed that it was signed in Abuja by President Muhammadu Buhari on September 30, 2020.

The disclosure was made by the Minister for Aviation, Hadi Sirika, through a tweet on his official Twitter handle on Tuesday, October 6, 2020.

What they are saying

The Minister said, “The agreement is the instruments of ratification of the bilateral air service agreement between Nigeria and USA, India, Morocco, as well as Rwanda.”

He added that Nigeria will take advantage of the agreement to strengthen economic, social and cultural ties with the US.

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Hospitality & Travel

Transport fare for motorcycle “Okada” more than doubled in 2020

Data from the NBS reveals the average fare paid by commuters for a journey by motorcycle more than doubled year on year.

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Transport fare for motorcycle "Okada" more than doubled in 2020, Lagos State bans Gokada, ORide, MaxNG, others from 15 local governments 

Data from the National Bureau of Statistics (NBS) reveals the average fare paid by commuters for a journey by motorcycle per drop more than doubled year on year (September 2020 vs 2019 respectively).

This was contained in the recently released data on Transport fare for September 2020 in Nigeria. This covers bus journey within the city per drop, bus journey intercity, state route, charge per person, airfare charge for specified routes single journey, journey by motorcycle (Okada) per drop, and waterway passenger transport.

READ: Nigeria’s manufacturing sector contracts for 5th consecutive month – CBN 

Motorcycle Fares

  • According to the report, the average fare paid by commuters for the journey by motorcycle per drop increased by 10.47% MOM and by 111.11% YOY to N255.51 in September 2020 from N231.29 in August 2020.
  • The states with the highest journey fare by motorcycle per drop were Niger (N1,467.49), Kogi (N362.47), and Rivers (N345.80); while states with the lowest journey fare by motorcycle per drop were Adamawa (N76.55), Katsina (N100.84), and Kebbi (N125.60).
  • Similarly, the average fare paid by commuters for bus journeys within the city increased by 7.92% MOM and by 63.88% YOY to N309.73 in September 2020 from N286.99 in August 2020.

READ: These 3 states are the most expensive to travel from in Nigeria

READ: NBS discloses States with highest bus fares in Nigeria (Full List)

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Bus Fares

The states with the highest bus journey fare within the city were Zamfara (N579.84), Bauchi (N492.14), and Cross River (N416.32); while states with the lowest bus journey fare within the city were Abia (N188.50), Kebbi (N192.48), and Borno (N200.80).

  • The average fare paid by commuters for bus journey intercity increased by 0.36% MOM and by 24.30% YOY to N2,022.70 in September 2020 from N2,015.50 in August 2020.
  • The states with the highest bus journey fare intercity were Abuja FCT (N4,315.22), Lagos (N3,073.25), and Sokoto (N3,000.00); while states with the lowest bus journey fare within the city were Kwara (N223.45), Benue (N274.64), and Ondo (N291.07).

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Air Travel

Average fare paid by air passengers for specified routes single journey decreased by -4.59% MOM and increased by 20.60% YOY to N36,884.59 in September 2020 from N38,659.86 in August 2020.

  • The states with the highest airfare were Lagos (N39,750.00), Rivers (N39,520.00), and Anambra (N38,950.00); while states with the lowest airfare were Akwa Ibom (N32,500.00), Sokoto (N33,700.00), and Benue (N35,000.00).
  • The average fare paid by passengers for waterway passenger transport increased by 7.06% MOM and by 34.13% YOY to N734.26 in September 2020 from N685.82 in August 2020.
  • The states with the highest fare by waterway passenger transport were Bayelsa (N2,250.23), Rivers (N2,200.64), and Delta (N2,150.30); while states with the lowest fare by waterway passenger transport were Borno (N200.48), Gombe (N264.29), and Abuja FCT (N294.10).

READ: Nigeria’s inflation rate hits 13.71% as food prices soar

What this means: According to the NBS, transportation makes up 6.4% of consumption expenditure of millions of naira next only to food at over 50%. Transport is also a key input cost for determining food prices and conducting business in the country contributing to the inflation rate. A combination of bad roads. poor infrastructure, exchange rate devaluation, removal of fuel subsidies, and a general rise in prices of goods and services have impacted transportation costs across the country.

 

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