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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.

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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.

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.

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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.

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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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Currencies

Exchange rate gains big at NAFEX as forex turnover pops 916%

Forex turnover at the Investor and Exporters  window recorded a massive increase on Thursday

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FOREX, NAFEX market turnover drop by 59%, Naira crashes to N470/$1 as currency uncertainty worsens 

Nigeria’s exchange rate at the NAFEX window appreciated significantly to N385.50 during intraday trading on Thursday, August 6, 2020. In another development, the exchange rate at the parallel market remained unchanged on Thursday as it closed at N474/$1 after exchanging as high as N486/$1.

Market Watch

Parallel Market: At the black market where forex is traded unofficially, the Naira remained unchanged against the dollar for a second consecutive day to close at N474/$1 on Thursday, according to information from Abokifx, a prominent FX tracking website. This was the same rate that it exchanged on Wednesday, August 5. However, in sharp contrast, Nairametrics forex tracker obtained a price as high as N486/$1 from some traders suggesting market volatility still persist.

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NAFEX: The Naira depreciated against the dollar at the Investors and Exporters (I&E) window on Thursday, closing at N385.50/$1.

  • This represents an impressive N3.75 gain when compared to the N389.25 rate close that was reported on the last trading day, Wednesday, August 5.
  • The opening indicative rate was N386.88 to a dollar on Thursday. This represents a 91 kobo gain when compared to the N387.79 to a dollar that was recorded on Wednesday.
  • The Naira fell to as high as N393.05 during intraday trading before strengthening to the closed rate of N389. It also sold for as low as N383.75/$1 during intraday trading.

Forex is sold at several prices and at different times during the day.

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READ ALSO: How the Coronavirus has impacted Forex trading

Forex Turnover: Meanwhile, forex turnover at the Investor and Exporters (I&E) window recorded a massive increase on Thursday, August 6, 2020, as it rose by 916.77% day on day.

  • According to the data tracked by Nairametrics from FMDQ, forex turnover increased from $10.49 million on Wednesday, August 5, 2020, to $106.66 million on Thursday, August 6, 2020.
  • The forex turnover for the day is the highest daily volume recorded in about 3 weeks. The dollar supply which had remained weak improved significantly during the day’s trading.
  • The average forex sale for last week was a low volume of about $32 million which is a slight improvement on the $27 million that was recorded the previous week. FX turnover which topped the $100 million mark after weeks of very low volume, still falls short of the over $200 million turnover that was recorded in January.
  • Total forex trading at the NAFEX window in the month of July was $937 million compared to $875 million in June.
  • The exchange rate disparity between the official NAFEX rate and the black-market rate widened further on Thursday staying as wide as N88.5. Nigeria maintains multiple exchange rates comprising the CBN official rate, the BDC rates, SMIS, and the NAFEX (I&E window).

Exchange rate unification remains on the cards and yet to be implemented weeks after the central bank governor confirmed it will be executed.

READ ALSO: MTN Nigeria, IHS ditch CBN rate for NAFEX in revised tower agreement

COVID-19 Pressures

Nigeria’s airspace remains closed to commercial international flight operations and won’t be open till October 2020. Foreign travel has often been a source of demand for the greenback.

  • The recent demand for dollars at the parallel market is thought to be fueled by speculators.
  • The parallel market also caters to forex trades through wire transfers especially for buyers who cannot fulfil their dollar demands at the I&E window or the SMIS window.
  • The exchange rate for wired transfer is often at a premium to the black market rate.

Forex Challenges: Last few weeks have been most challenging for the foreign exchange market as it witnessed very low liquidity. The downward slide against the greenback and some other major currencies continued this week due to tightened liquidity in the system.

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  • According to a report from FSDH research, forex inflows into the I&E window had dropped significantly in the second quarter of 2020 on the back of lower foreign portfolio inflows.
  • Although there was a slight improvement in the month of July, the turnover of $937 million is a far cry from the $3.19 billion, $5.02 billion and $3.7 billion turnover that was recorded in the months of January, February and March respectively before the lockdown which was triggered by the coronavirus pandemic.
  • The low oil prices have constrained the CBN’s capacity to intervene further in the foreign exchange market as dollar inflow still remains very low.

The exchange rate has faced significant pressure in both the NAFEX window and the black market. The pressure stemmed from declining external reserves and falling oil price

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Nigeria’s top 10 agricultural exports hit N289.3 billion, as Sesamum seeds, Cocoa top list

Here is the breakdown of Nigeria’s top agricultural exports and top destination countries.

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Agricultural financing, Top AgriTech deals currently on sale in Nigeria – June 2020

Nigeria’s top 10 agricultural export is estimated to have earned the country about N289.3 billion in one year (April 2019 – March 2020). This is according to data collected from various foreign trade reports, as compiled by the National Bureau of Statistics (NBS).

A cursory look at the data showed that Sesamum seeds and Cocoa remain Nigeria’s biggest agricultural exports, with the two products jointly accounting for over 60% of the entire agricultural exports in the country.

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READ MORE: UPDATED: Nigeria’s foreign trade drops to N8.3 trillion, down by 18% in Q1 2020

Number Breakdown: Top ten Agricultural Exports in Nigeria

By operational definition, the NBS defined agricultural products as goods that come from the planting of crops and/or raring of animals. Here is the breakdown of Nigeria’s top agricultural exports and top destination countries.

  • Sesamum seeds: Sesamum seeds, the tiny, oil-rich seeds, have been Nigeria’s agricultural export biggest earner for some years. During the period under review, Nigeria made the sum of N112.8 billion from the export of the products and this accounted for 38.9% of the top 10 agricultural products. Top destinations for the product include Japan, China, Turkey, India, and Vietnam.
  • Cocoa Beans: Cocoa (Fermented, superior quality raw cocoa) exports is Nigeria’s second largest agricultural export. During the period under review, cocoa export was estimated to be N109.6 billion, accounting for 37.8% of the top agricultural exports. The top destinations for the product are Germany, Netherlands, Spain. Indonesia, Belgium, Malaysia, and Estonia.
  • Cashew nuts (In shell and shelled): Cashew nuts are Nigeria’s 3rd biggest agricultural export product. In one year (March 2019 – March 2020), Nigeria generated a total sum of N38.2 billion from cashew nuts export. The top destinations are Vietnam, India, USA, Russia and the Netherlands.
  • Frozen shrimps and prawns: Ranking 4th on the list, Frozen shrimps and prawns accounted for 3.4% of the biggest export in Nigeria, estimated to be N9.85 billion in the last one year. According to the breakdown, Netherlands, Belgium, France, Vietnam, and the USA are top destinations for the export of the products.
  • Natural cocoa butter: Natural cocoa butter ranks as Nigeria’s 5th biggest agricultural export product within the period. Nigeria generated the sum of N7.69 billion as revenue proceed from the export of cocoa butter. Germany and Estonia are top destinations for the product
  • Sesame oil and its fractions: Sesame oil, an edible vegetable oil derived from sesame seeds, ranks 6th on the list with an estimated export value of N3.1 billion
  • Other agricultural products on the top 10 list include Cotton, Agro-food items, Other cut flowers & flower buds of kind suitable ornamental purposes and Ginger. During the period, a total sum of N2.53 billion was generated from Cotton export, Agro-food items (N1.97 billion), Cut flowers and flower buds (1.96 billion) and Ginger (N1.43 billion).

READ ALSO: Nigeria’s oil crisis compounded as India’s fuel demand crashes by 60% 

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Upshots: Nigeria’s Agric. export may experience the biggest contraction in 2020

As at the end of Q1 2020, Nigeria’s total foreign trade was estimated at N8.3 trillion, an 18% decline when compared to N10.12 trillion recorded in Q4 2019. The decline in foreign trade showed the earliest sign of the impact of COVID-19 pandemic that led to disruption in cross border trade.

READ ALSO: Nigeria’s trade balance hits recession low, records N579 billion deficit in Q4 2019

Despite the gradual easing of lockdown in major economies, restrictions imposed on cross border movements still subsist and this may demand for the goods and commodity prices in the short to medium term.

On the flip side, Nigeria’s cocoa-industry association recently cut its output estimate for the 2020 main crop by 18%, citing the spread of the fungal black pod disease caused by heavy rains in the country’s main growing areas.

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COVID-19 Update in Nigeria

On the 6th of August 2020, 354 new confirmed cases and 3 deaths were recorded in Nigeria.

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The spread of novel Corona Virus Disease (COVID-19) in Nigeria continues to record significant increase as the latest statistics provided by the Nigeria Centre for Disease Control reveal Nigeria now has 45,244 confirmed cases.

On the 6th of August 2020, 354 new confirmed cases and 3 deaths were recorded in Nigeria, having carried out a total daily test of 2,673 samples across the country.

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To date, 45,244 cases have been confirmed, 32,430 cases have been discharged and 930 deaths have been recorded in 36 states and the Federal Capital Territory. A total of 306,894 tests have been carried out as of August 6th, 2020 compared to 304,221 tests a day earlier.

COVID-19 Case Updates- 6th August 2020,

  • Total Number of Cases – 45,244
  • Total Number Discharged – 32,430
  • Total Deaths – 930
  • Total Tests Carried out – 306,894

According to the NCDC, the 354 new cases are reported from 17 states- FCT (78), Lagos (76), Kaduna (23), Ebonyi (19), Oyo (18), Nasarawa (17), Rivers (17), Delta (16), Kwara (15), Akwa Ibom (13), Edo (12), Ogun (12), Plateau (11), Kano (9), Bauchi (6), Borno (6), Ekiti (6).

Meanwhile, the latest numbers bring Lagos state total confirmed cases to 15,627, followed by Abuja (4,241), Oyo (2,825), Edo (2,340), Rivers (1,911), Kano (1,608), Delta (1,557), Kaduna (1,530), Ogun (1,428), Plateau (1,294), Ondo (1,243), Enugu (880), Ebonyi (838), Kwara (815), Katsina (746), Borno (634), Abia (625), Gombe (620), Osun (586), and Bauchi (574).

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Imo State has recorded 472 cases, Nasarawa (360), Benue (356), Bayelsa (342),  Jigawa (322), Akwa Ibom (234), Niger (226), Adamawa (176), Ekiti (159), Sokoto (154), Anambra (142),  Kebbi (90), Zamfara (77), Taraba (72), Cross River (68), Yobe (67), while Kogi state has recorded 5 cases only.

READ ALSO: COVID-19: Western diplomats warn of disease explosion, poor handling by government

Lock Down and Curfew

In a move to combat the spread of the pandemic disease, President Muhammadu Buhari directed the cessation of all movements in Lagos and the FCT for an initial period of 14 days, which took effect from 11 pm on Monday, 30th March 2020.

The movement restriction, which was extended by another two-weeks period, has been partially put on hold with some businesses commencing operations from May 4. On April 27th, 2020, Nigeria’s President, Muhammadu Buhari declared an overnight curfew from 8 pm to 6 am across the country, as part of new measures to contain the spread of the COVID-19. This comes along with the phased and gradual easing of lockdown measures in FCT, Lagos, and Ogun States, which took effect from Saturday, 2nd May 2020, at 9 am.

On Monday, 29th June 2020 the federal government extended the second phase of the eased lockdown by 4 weeks and approved interstate movement outside curfew hours with effect from July 1, 2020. Also, on Monday 27th July 2020, the federal government extended the second phase of eased lockdown by an additional one week.

 

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READ ALSO: Bill Gates says Trump’s WHO funding suspension is dangerous

DateConfirmed caseNew casesTotal deathsNew deathsTotal recoveryActive casesCritical cases
August 6, 202045244354930332430118847
August 5, 2020448904579271732165117987
August 4, 2020444333049101431851116727
August 3, 202044129288896820663225707
August 2, 202043841304888520308226457
August 1, 202043537386883420287225677
July 31, 202043151462879119565227077
July 30, 202042689481878519270225417
July 29, 202042208404873519004223317
July 28, 202041804624868818764221727
July 27, 202041180648860218203221177
July 26, 202040532555858217374223007
July 25, 2020399774388561116948221737
July 24, 2020395395918451216559221357
July 23, 2020389486048332016061220547
July 22, 202038344543813815815217167
July 21, 202037801576805415677213197
July 20, 2020372255628011215333210917
July 19, 2020366635567891115105207697
July 18, 202036107653778614938203917
July 17, 202035454600772314633200497
July 16, 202034854595769914292197937
July 15, 202034259643760613999195007
July 14, 2020336164637541013792190707
July 13, 202033153595744413671187387
July 12, 2020325585717401613447183717
July 11, 2020319876647241513103181607
July 10, 2020313235757092012795178197
July 9, 202030748499689512546175137
July 8, 2020302494606841512373171927
July 7, 2020297895036691512108170127
July 6, 202029286575654911828168047
July 5, 2020287115446451111665164017
July 4, 202028167603634611462160717
July 3, 2020275644546281211069158677
July 2, 2020271106266161310801156937
July 1, 2020264847906031310152157297
June 30, 202025694561590179746153587
June 29, 20202513356657389402151587
June 28, 20202486749056579007149957
June 27, 20202407777955848625148947
June 26, 20202329868455458253144917
June 25, 20202261459454977822142437
June 24, 20202202064954297613138657
June 23, 20202137145253387338135007
June 22, 20202091967552577109132857
June 21, 202020242436518126879128477
June 20, 202019808661506196718125847
June 19, 202019147667487126581120797
June 18, 20201848074547566307116987
June 17, 202017735587469145967112997
June 16, 202017148490455315623110707
June 15, 20201665857342445349108857
June 14, 202016085403420135220104457
June 13, 20201568250140785101101747
June 12, 20201518162739912489198917
June 11, 2020145546813875449496737
June 10, 20201387340938217435191407
June 9, 2020134646633654420688937
June 8, 2020128013153617404084007
June 7, 20201248626035412395981737
June 6, 2020122333893429382680657
June 5, 20201184432833310369678157
June 4, 2020115163503238353576467
June 3, 2020111663483151332975227
June 2, 20201081924131415323972667
June 1, 20201057841629912312271579
May 31, 20201016230728714300768687
May 30, 2020985555327312285667267
May 29, 202093023872612269763447
May 28, 202089151822595259260647
May 27, 202087333892545250159787
May 26, 2020834427624916238557107
May 25, 202080682292337231155247
May 24, 202078393132265226353607
May 23, 202075262652210217451317
May 22, 2020726124522110200750337
May 21, 2020701633921111190748987
May 20, 202066772842008184046377
May 19, 202064012261921173444757
May 18, 202061752161919164443407
May 17, 202059593881826159441837
May 16, 202056211761765147239737
May 15, 202054452881713132039544
May 14, 202051621931683118038154
May 13, 202049711841646107037374
May 12, 20204787146158695936704
May 11, 202046412421521090235894
May 10, 202043992481421777834794
May 9, 202041512391271174532784
May 8, 202039123861181067931154
May 7, 20203526381108460128184
May 6, 20203145195104553425071
May 5, 2020295014899548123704
May 4, 2020280224594641722912
May 3, 2020255817088240020702
May 2, 20202388220861735119522
May 1, 20202170238691035117512
April 30, 2020193220459731715562
April 29, 2020172819652730713692
April 28, 2020153219545425512322
April 27, 20201337644102559942
April 26, 20201273914152399942
April 25, 20201182873632229252
April 24, 202010951143312088552
April 23, 20209811083231977532
April 22, 2020873912931976482
April 21, 20207821172631975602
April 20, 2020665382311884662
April 19, 2020627862221704362
April 18, 2020541482021663562
April 17, 2020493511841593172
April 16, 2020442351311522772
April 15, 2020407341211282672
April 14, 202037330111992632
April 13, 202034320100912422
April 12, 20203235100852282
April 11, 202031813103702382
April 10, 20203051770582402
April 9, 20202881471512302
April 8, 20202742260442262
April 7, 20202541661442042
April 6, 2020238650351982
April 5, 20202321851331942
April 4, 2020214540251850
April 3, 20202092542251800
April 2, 20201841020201620
April 1, 2020174352091630
March 31, 202013982091280
March 30, 2020131202181210
March 29, 2020111221031070
March 28, 20208919103850
March 27, 2020705103660
March 26, 20206514102620
March 25, 2020517102480
March 24, 2020444102410
March 23, 20204010112370
March 22, 2020308002280
March 21, 20202210001210
March 20, 2020124001110
March 19, 20208000170
March 18, 20208500170
March 17, 20203100030
March 16, 20202000020
March 15, 20202000020
March 14, 20202000020
March 13, 20202000020
March 12, 20202000020
March 11, 20202000020
March 10, 20202000020
March 9, 20202100020
March 8, 20201000010
March 7, 20201000010
March 6, 20201000010
March 5, 20201000010
March 4, 20201000010
March 3, 20201000010
March 2, 20201000010
March 1, 20201000010
February 29, 20201000010
February 28, 20201100010

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