Transcorp Hotels Plc yesterday released its financial statements for the 12 months ended, December 2017 which showed a decline in key ratios. Revenue fell from ₦15.3 billion in 2016 to ₦13.8 billion in 2017. Gross profit also fell from ₦11.4 billion in 2016 to ₦10 billion in 2017. Profit before tax also fell sharply from ₦5.2 billion in 2016 to ₦3.6 billion in 2017.
The decline in the result also leads to a drop in dividend declared, as the company has proposed to pay a dividend of 12.45 kobo per share— a sharp fall from the 40 kobo paid for the 2016 financial year.
What the results show
Loss of revenue: Revenue for the 12 months ended, December 2017 declined across all segments, with the exception of shop rental. Total revenue dropped from ₦15.3 billion in 2016 to ₦13.8 billion in 2017. Revenue from rooms dropped from ₦9.6 billion in 2016 to ₦8.5 billion in 2017.
Earnings from food and beverage dropped from ₦4.5 billion in 2016 to ₦4 billion in 2017. Earnings from service charge also dropped from ₦160 million in 2017 to ₦127 million in 2017. Other operating revenue also fell from ₦20 million in 2016 to ₦489 million.
Earnings from shop rental, however, doubled from ₦299 million to ₦625 million.
Cost of sales fell: Management kept a tight rein on costs as they fell slightly across segments. Cost of sales fell from ₦3.8 billion in 2016 to ₦3.7 billion in 2017.
Transcorp Hilton Abuja is still the key driver: The hotel continues to be the key earner in the group as the other subsidiaries contributed less than a billion to the group revenue. It accounted for ₦12.9billion out of the group’s ₦13.8 billion revenue and ₦2.63 billion of the group’s ₦2.68 billion profit after tax in 2017. Though it is the highest earner, it shared the same fate with other subsidiaries in the area of reduced earnings— it had made ₦14.5 billion out of the group’s ₦15.3 billion revenue and ₦3.7 billion of the group’s ₦4billion profit after tax in 2016.
How the Abuja runway shutdown had a negative effect
One major money earner for Transcorp Hotel Abuja is the rental of its conference halls for national conventions and conferences. The Abuja airport shut down for 6 weeks in 2017 (from the 8th of March to the 19th of April) had an adverse effect on the hotel, as many conferences were shifted or in some cases, cancelled. Hotel room bookings were also affected as it cost the hotel potential guests.
2018 could be better
2018 could be better in terms of performance for the Abuja arm as the Abuja airport is functioning. The increase in political activities due to the approaching elections means that Transcorp Hilton will have more patronage.
The company is also billed to complete the refurbishment of the Transcorp Hilton Hotel Abuja by June 2018, and the construction of a multi-purpose hall by December 2018.
Transcorp Hilton Hotel was established on July 12, 1994. The company owns and operates the Transcorp Hilton Abuja. It holds 100% interest in Transcorp Hotels Calabar and Port Harcourt Limited. It also has interests in Transcorp Ikoyi Limited.
The company was listed on the Nigeria Stock exchange following the issuance of an IPO in 2015.