BusinessDay

Improved strategy, cost efficiency lift Ikeja Hotel’s H1 revenue by 83%

… highest in 9 years

The hotel business favours Ikeja Hotel Plc as half-year revenue a hits 9-year high in the first half (H1) of 2022, according to findings by BusinessDay.

The Hotel business revenue grew by 83.24 percent to N6.89 billion in the first half of 2022 compared to N3.76 billion in the corresponding half of 2021.

In the same vein, on a quarterly basis, revenue reported by the company was up 7.5 percent to N3.57 billion in the second quarter (Q2) of 2022 from N3.32 billion in the first quarter (Q1) of 2022.

While rooms accounted for 56.6 percent to the total revenue generated in the period, the 100 percent growth in the food and beverage revenue segment was responsible for the boost in total revenue generated by the hotel business.

The food and beverage revenue segment grew to N2.44 billion in the first half of 2022, up from N1.22 billion reported in the first half of 2021. Following closely is the rooms revenue segment which grew by 77.27 percent year on year to N3.90 billion from N2.20 in the first half of 2021.

The company’s chairman, Anthony Idigbe, who was represented by a director of the company Fadeke Olugbemi linked the improved performance to growing occupancy return to pre-COVID-19 levels, in addition to enhanced business strategies and aggressive cost management efforts, assuring shareholders of the board’s commitment to ensuring directors continue to make valuable contribution to the growth of the business.

Despite the cost of sales claiming 73.4 percent of the total revenue in the period, and amidst economic headwinds, the hotel company recorded a profit of N120 million in the first half of 2022, a 140 percent improvement from a loss of N229 million reported by the hotel in the first half of 2021.

The profit attributable to its shareholders also experienced a 170 percent uptick to N112 million in the first half of 2022 from a loss of N160 million in the first half of 2021.

Read also: Hotels in Nigeria rebound to pre-pandemic levels

Its cost of sales grew by 75.69 percent in the first half of 2022 to N5.06 billion from N2.88 billion in the first half of 2021.

The boost in the cost of sales can be attributed to the 78.8 percent year-on-year growth seen in food and beverages which amounted to N1.3 billion, and 62.97 percent year-on-year growth seen in the administrative and general line item which amounted to N1.2 billion in the first half of 2022.

Finance costs reported by the company also grew by 11.78 percent to N536 million in the first half of 2022 from N479.5 million in the corresponding half of 2021.

Ikeja Hotel’s total assets in the period were up 11.18 percent to N46.54 billion in the first half of 2022 as against N41.86 billion in the corresponding period of 2021.

In the same vein, its shareholder’s equity appreciated by 3.61 percent to N12.07 billion in the first half of 2022 from N11.96 billion in the first half of 2021.

Analysis by Businessday to evaluate the profitability of the companies shows a profit margin of 1.74 percent in the first half of 2022.

The hotel’s cash and cash equivalents which shows the total value of cash a company has on hand amounted to N6.89 billion in the first half of 2022, a 60.6 percent improvement compared to N4.29 billion in the first half of 2021.

Its net cash generated from operating activities spiked by a whopping 481.9 percent to N3.09 billion in the first half of 2022 from N530.8 million in the corresponding period of last year.

In the period under review, the hotel reported negative net cash flows used in investing activities of N514 million from N15.5 million in the first half of 2021.

The hotel during the period, however, invested in new property, plants, and equipment, and utilization of capital work in progress which amounted to N225 million, and N301 million respectively.

Net cash flows from financing activities amounted to -N531 million in the first half of 2022 largely due to finance costs paid which amounted to N531 million during the period.

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