Transcorp Hotels Drives Revenue, Profit With Service Delivery

With the management improvement in quality of service delivery to customers, Transcorp Hotels Plc migrated from its unaudited half year (H1) ended June 30, 2021 loss to an impressive unaudited half year (H1) ended June 30, 2022.

Transcorp Hotels migrated from a loss before tax of N110.74million to N2.37billion in H1 2022, and reported N1.69billion profit after tax in H1 2022 from a loss of N110.74million reported in H1 2021.

The top hospitality company’s growth in revenue is on the backdrop of the management expansion in key business segments such as its Rooms service in Transcorp Hilton Abuja and Transcorp Hilton Calabar as both remain the first-choice destination for high-profile guests, and catering to guests from all over the world for any travel need including business and leisure.

As the global economy continues to open over COVID-19 restrictions and as tourism recovery continues, occupancy rate has averaged at 79 per cent in Transcorp Hilton Abuja during the period and lifted revenue in H1 2022 as against 54 per cent occupancy rate reported in H1 2021.

Also, growth reported in its food and beverages, recreation service, shop rental, among others played critical role in revenue generation by Transcorp Hotels in the period under review.

Revenue Growth

Specifically, Transcorp Hotels grew its revenue by 70.8 per cent to N14.99 billion in H1 2022 from N8.77 billion reported in H1 2021.  

From the profit & loss figures, the breakdown of revenue showed 71.9 per cent increase in room sales to N9.6 billion in H1 2022 from N5.59 billion in H1 2021.

The revenue generated from food and beverages rose by 99.2 per cent to N4.64 billion in H1 2022 from N2.33 billion in H1 2021, while revenue generated from shop rental grew significantly by 99.2 per cent to N4.64billion in H1 2022 from N2.33billion in H1 2021.

Transcorp Hotels reported N4.05 billion cost of sales in H1 2022, representing an increase of 75.34 per cent from N2.31 billion in H1 2021 to positioned gross profit to N10.94 billion in H1 2022 from N6.67 billion reported in H1 2021.

This brings gross profit margin to 72.98per cent in H1 2022 from 73.68 per cent in H1 2021.

Aside revenue, the decline in finance cost and effective management of operating expenses were also other financial parameters that lifted Transcorp Hotels’ from losses to profitability.

With about 37 per cent increase in operating expenses (OPEX) to N6.81billion in H1 2022 from N4.99 billion in H1 2021, Transcorp Hotels reported N4.42billion operating income from N2.03billion in H1 2021.

A total of N890.29 million management fees in H1 2022 from N573.8 million reported in H1 2021 and 41.3 per cent increase in Energy cost to N1.09 billion in H1 2022 from N773.14 million in H1 2021, contributed to Transcorp Hotels’s operating expenses.

The group’s OPEX/revenue dropped to 45.5 per cent in H1 2022 from 56.82 per cent in H1 2021.

Hotel Management Services

Management fees are made up of management fee payable to Hilton International at 1.5 per cent of revenue, incentive fee based on an accelerated rate schedule applied on gross operating profit. These fees are specified in the executed management agreement between Transcorp Hotels and Hilton International for the provision of Hotel Management and other related services to the Company.

Meanwhile, finance cost from interest on debts and borrowings dropped by 4.02 per cent to N2.05 billion in H1 2022 from N2.14billion in H1 2021, while finance income grew significantly by 146.84per cent to N2.6million in H1 2022 from N1.06million in H1 2021.

A subsidiary of Transnational Corporation Plc, Transcorp Hotels had reported a 77.4per cent growth in revenue to N7.04 billion in first quarter (Q1) ended March 30, 2022 from N3.97 billion in the same period in 2021.

The hospitality company that also owns an online booking platform aura, also recorded more than 600 per cent growth in profit before tax to N1.067 billion from a loss of N203.7 million in the same period last year.

The group in 2021 full financial year had announced 114 per cent growth in revenue to N21.74 billion from N10.16 billion reported in 2020, while Gross Profit rose by 143 per cent to N16.23 billion from N6.67 billion.

The group had maintained an impressive growth in its performance, signaling its strong recovery from the impact of COVID- 19 in 2020.

The performance also reflects the company’s resilience and nimbleness, as it consistently leverages innovation to achieve an outstanding performance, breaking occupancy, and revenue records in 2021.

With the expansion in hospitality business and facilities upgrades, Transcorp Hilton Abuja and restaurant Zuma Grill have been nominated in six categories of the 2022 World Luxury Hotel and Restaurant Awards.

The Transcorp Hilton Abuja nominated for Luxury Business Hotel, Luxury City Hotel and Luxury Hotel, while Zuma Grill got nominated for Fine Dining Cuisine, Most Romantic Ambience and Luxury Hotel Restaurant.

Balance sheet on a strong stance

As of June 30, 2022, Transcorp Hotels reported N114.01billion total assets from N115.9billion reported in full year ended December 31, 2021.

The group’s current assets dropped by 18.9 per cent to N7.82billion as of June 30, 2022 from N9.6billion in 2021 FY, while total long-term assets closed June 30, 2022 at N106.19billion, representing a decline of 0.05 per cent from N106.25billion reported in 2021 FY.

The balance sheet structure showed stronger retained earnings of about N45.58billion as of June 30, 2022 from N44.58billion in 2021 financial year to close total equity at N63.2 billion as of June 30, 2022 from N62.22billion reported in 2021 financial year.

In addition to balance sheet structure, total liabilities closed June 30, 2022 at N51.99billion from N53.67billion in 2021, to bring the proportion of total liabilities/ total assets at 45.6 per cent from 46.3 per cent reported in 2021 FY.

As current liabilities dropped by 5.6 per cent to N24.19billion as of June 30, 2022 from N25.63billion in 2021 FY, long-term liabilities also depreciated by 0.8 per cent to N27.8billion as of June 30, 2022 from N28.04billion in 2021 FY.

Management’s Optimism

Commenting on the H1 2022 performance, the Managing Director/ CEO of Transcorp Hotels, Dupe Olusola in a statement, said the Group’s   properties in Abuja and Calabar remain the first-choice destination for high-profile guests, catering to guests from all over the world for any travel need including business and leisure.

According to her, “We have delivered an excellent performance in the first half of the year. We are constantly innovating and tailoring our services to the needs of our guests. We are particularly proud of the spectacular performance in our domestic tourism and leisure segment despite the recovery in our International Business Traveller (IBT) and Group Business Segments.

“Our IBT and Group business segments have continued to recover and contribute significantly to our growth. This is a testament to our commitment to continually create value for our customers and stakeholders in line with our corporate mission.

“Our half-year performance has strengthened our confidence in our ability to continue to grow and improve profitability, ensuring great returns to our shareholders,” she said.

She added that, “The hospitality brand is investing in some major projects to expand its operations and further enhance value. These projects include improvements at its hotels, especially Transcorp Hotels Calabar where rooms and facilities are being upgraded.

“The Company is also developing an event center at Transcorp Hilton Abuja which will be equipped to host major events in the capital city. The project is expected to be completed in March 2023.

“Transcorp Hotels is also working on extending the rooming at Transcorp Hilton Abuja to cater to the frequent overflow, as the hotel remains first choice for guests in Abuja. Other projects are billed for Lagos and Port Harcourt.”