Nigeria’s hospitality sector has remained stagnant following restrictions put in place to curb the spread of the COVID-19 pandemic.
The Government had enforced policies that will help flatten the curve of COVID-19, which includes community lockdowns, social distancing, stay-at-home orders, travel and mobility restrictions
These, resulted in temporary closure of many hospitality businesses and significantly reduced the demand for the services and revenues.
While the reopening process has slowly begun and authorities have started to ease restrictions, the COVID-19 second wave continues to exert profound impacts on the operating profit of firms under the sector due to low patronage and increasing cases of the pandemic.
Stock market investors at the weekend urged the government to support the sector with incentives in form of tax holiday throughout the period of the pandemic as it affects their share price on the Nigerian Stock Exchange (NSE).
The investors argued that government should engage industry stakeholders on various intervention measures that would help revitalise the company and boost profitability as obtainable in other emerging economies.
Report from four of the major listed hotels on the Nigerian Stock Exchange (NSE), revealed a revenue decline of nearly 90 percent due to lockdowns.
Ikeja Hotels , Tourist Company of Nigeria , Capital Hotels , and Transcorp Hilton Hotel Plc lost a large chunk of their revenue in the three months preceding June 2020
During the third quarter,revenue of Transnational Corporation of Nigeria Plc, one of the big players in the industry, declined by -7% to N54 billion from N58 billion achieved in the previous quarter.
The company’s profit before tax declined by 73 percent to N2 billion from N7.3 billion achieved in the corresponding period in 2019 while profit after tax declined by 74 per cent to N1.7 billion down from N6.7 billion in 2019
Ikeja Hotel Plc also posted a second consecutive loss in 2020. Its revenue fell by -60.49 percent from N9.12 billion in Q3 2019 to N3.6 billion in Q3 2020.
Its loss before tax dipped by -330 percent in Q3 2020. The hotel’s loss before tax rose to N1.39 billion in Q3 2020 from a loss of N777.06 million in H1 2020 and a profit before tax of N603.88 million in Q3 2019.
For Capital hotel plc, its Q3 2020 Unaudited results showed that revenue declined by -62 per cent to N1.4 billion from N3.7 billion posted in corresponding period in 2019.
The firm’s loss before tax stood at N257 million while net assets grew by 177 percent from N6.6 billion to N18.2 billion.
The President of New dimension Shareholders Association of Nigeria, Patrick Ajudua urged government to provide palliatives for the sector to avoid collapse.
He also underscored the need for directors of companies under the sector to cut down on fees and review all technical agreement inimical to the growth of the company.
The Publicity Secretary of the Independent Shareholders Association, Moses Igbrude said the pandemic has led to the closure of some companies and retrenchment in the sector.
“There is the need for the FG to intervene and rescue the sectors mostly affected by the pandemic especially hospitality and tourism as well the aviation.”
An independent investor, Amaechi Egbo said there has been a remarkable decline in the occupancy rate, the number of guests arriving and the revenues of operators in the industry.
He pointed out that crisis is one of the events by which the hospitality industry is most affected due to its dynamic structure.
“Hospitality businesses are expected to make substantial changes to their operations in the COVID-19 business environment in order to ensure employees’ and customers’ health and safety, and enhance customers’ willingness to patronise their business.”