Business

Covid-19 crashes profits for Ikeja Hotels

The significant drop in revenue recorded by the Ikeja Hotels Plc, owners of the Sheraton Hotel Lagos is as a result of the lockdown of the economy imposed by the Federal Government in Lagos following the spread of the Coronavirus disease (Covid-19) pandemic in the state.

It would be recalled that the Federal Government shut down the economies of Lagos, Ogun states as well as the federal capital Territory (FCT) back in March, this year, to curb the spread of the Covid-19 in the country.

Announcing the half year financial report of the company, Board of Ikeja Hotels Plc, which owns controlling stake at Sheraton Lagos Hotels, declared a huge after-tax losses of N786 million for the H1, 2020 statement.

With a finance income of N11.5 million and operating costs of N432.3 million, compared to N386.4 million recorded in H1’19, Ikeja Hotel closed June 30, 2020, with a loss before tax of N777.1 million compared with the profit before tax of N341.9 million in 2019 half-year.

Abeyanews recalls that during the first six months of 2019, the firm recorded a profit after tax of N284.5 million.

In a statement made available to Abeyanews, Monday, the company explained that the total closure of the hospitality industry which meant that only in-house guests of the hotel were catered for caused a huge drop in earnings for the first half of the year.

In the report, the company generated revenue amounting to N2.9 billion representing a drop from N5.8 billion recorded same period of last year.

Also, in H1 2020, only N1.7 billion was generated from rooms compared with N3.5 billion 12 months earlier, while revenue from food and beverage (F&B) fell to N887.4 million from N1.9 billion, with miscellaneous income crashing to N109.9 million from N313.3 million.

This is also as the cost of sales dropped to N2.7 billion from N4.4 billion, while the gross profit crashed to N177.4 million from N1.5 billion in H1 2019.

However, the other income jumped to N268.3million from N149.1 million as a result of the N13.3 million made from the sales of scrap as well as exchange gain on translation of currency.

Despite the lockdown and the halting of activities in some parts of the country, the administrative and general expenses of Ikeja Hotel increased to N677.7 million from N628.1 million, while the sales and distribution expenses reduced to N124.3 million from N242.6 million, leaving the company with an operating loss of N356.3 million as against the operating profit of N728.3 million in the first six months of last year.

“The company will respond appropriately to reduce this negative impact significantly and improve the fortunes of the company as the government further relaxes COVID-19 pandemic regulations and allows resumption of international flights,” Ikeja Hotel assured.

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