One of the leading companies in the hospitality and tourist industry, Ikeja Hotel has posted N2.73 billion revenue as it continues to grapple with operating challenges, the company said in its June 30, 2014, financial statement posted on the website of the Nigerian Stock Exchange.
For the first six months through June 2014, the company’s revenue fell by 14.65 percent to N2.73 billion from N3.20 billion the same period of the corresponding year (HY) 2013.
The hit at the top-line level, according to the company in a note released recently, was caused by operating challenges such as increased competition from new entrants such Intercontinental Hotel and the whole of Lagos metropolis as a whole. This also caused reduction in room department, which is a major revenue driver.
Additionally, it also incurred huge costs in the refurbishment of the newly acquired Capital Hotel, though the funding of the new investment has not been resolved.
Ikeja Hotel’s operating expenses were up by 12.12 percent to N1.38 in HY 2014, as against N1.38 billion the preceding year as it rely on diesel oil which is an expensive alternative source of power.
As a result of spiraling costs and a 7793 percent increase in finance costs, the company posted a loss before tax of N41.56 million from N775.42 million recorded last year.
Further analysis by BusinessDay of the financial statement of the company revealed cost of sales decrease by 2.25 percent to N1.16 billion compared with N1.19 billion last year, while cost of sales margin jumped to 42.49 percent in 2014 from 37.18 percent last year.
In a bid to maintain its leadership position in the hotel sector of Nigeria’s hospitality industry, Ikeja Hotel extended its operationts to the Federal Capital City, Abuja in 2002 through the acquisition of controlling interest in the Capital Hotels plc
Despite the challenges besetting the company, the Nigeria market provides copious and enormous opportunities for the hotel and hospitality giant to tap into her economy of $510 billion (N80.22trn).
The robust economy is also attracting flow of foreign divestment into the country a positive sign that the number of lodgers in Africa populous nation Nigeria will increase tremendously.
Additionally, the spike in tourist attraction in the country is expected to bring about growth spurt for companies operating in the hospitality and hotel industry.
Ikeja Hotel’s total assets were up by 1.75 percent to N17.44 billion in HY 2014, from N17.14 billion the preceding year.
The company’s share price closed at N2.66 on the floor of the NSE, while market capitalisation was N5.52 billion
BALA AUGIE
