Transcorp Hotels: Strong Fundamentals Drive First-time Interim Dividend

Nume Ekeghe writes on the recent strides by Transcorp Hotels and its impressive results which rewarded shareholders with interim dividend

Transcorp Hotels Plc for the first time since being listed on the Nigeria Exchange Limited (NGX) in 2015 has declared interim divided to reward shareholders. The mouth-watering return is driven by fundamentals the company has built over the years.

The key fundamentals include growing revenue and redefining hospitality standards in Africa through its businesses, including the iconic Transcorp Hilton, Nigeria’s flagship hospitality destination, and digital platform, Aura by Transcorp Hotels.

Transcorp Hotels joined Transcorp Power Plc and Transcorp Corporation Plc to reward shareholders with interim dividend and it is coming on the backdrop of robust profit generation and resounding revenue drive. 

The management of Transcorp Hotels declared an interim dividend of N0.10 per 50 kobo ordinary share, translating into N1.02 billion for the half year (H1) ended June 30, 2024.

For Transcorp Power, the management proposed an interim dividend of N1.50kobo per share and the group, Transcorp Plc shareholders got an interim dividend of N0.10 kobo per 50 kobo ordinary share.

The combined interim dividend declared by the three firms is worth about N16.34 billion amid generating N96.18 billion profit after tax in the period under review, about 224.84 per cent increase from N29.61 billion profit after tax generated in the corresponding period of 2023. 

However, Transcorp Hotels in its H1 22024 result and accounts performance showed a continuous exponential growth from 2023 full year accounts as revenue stood at N29.7 billion in H1 2024, about 61 per cent increase from N18.5 billion reported in H1 2023.

Growth Drivers

Analysis of the company’s results showed that room services and food & beverage were the major drivers of revenue growth in H1 2024. Room services in Transcorp Hotels stood at N19.66 billion in H1 2024 from N12.26 billion in H1 2023, while revenue from food & beverage moved from N5.03billion in H1 2023 to N8.67billion reported in H1 2024.

In the period under review, the company’ occupancy grew to 81per cent in H1 2024, up from 77per cent in H1 2023.

Revenue per Available Room (RevPAR) increased by 57per cent to N162,999 from N103,646 during the same period in 2023.

Cost of sales stood at N8.53 billion, an increase of 71.09per cent from N4.99 billion reported in H1 2023, driven primarily by N5.37 billon food and beverages cost of sales in H1 2024 from N3.18billion reported in H1 2023 as 

Non-core business income stood at N4.23 billion in H1 2024, representing an increase of 338.74 per cent from N964.75 million reported in H1 2023.

With the rising inflation, Transcorp Hotel declared N13.28 billion operating expenses, about 50.61per cent increase from N8.82 billion declared in H1 2023  

 2023FY, 2024 H1 Comparism

Further analysis showed that profit generation in H1 2024, was a reflection of 2023FY performance. Transcorp Hotels’s profit before Tax closed H1 2024 at N10.5 billion, about 192 per cent increase from N3.6 billion reported in H1 2023, while profit after tax increased to N6.6 billion in H1 2024, a growth of 157 per cent when compared to N2.6 billion reported in H1 2023.  

The company in 2023financial year sustained its profitability momentum and dividend payout to shareholders amid domestic macroeconomy challenges. 

The company in financial year ended December 31, 2023 declared a resounding performance, driven by the management’s effective management and innovations.

The group’s bottom-line performance showed a resilient result and accounts with N9.48billion profit before tax in 2023, an increase of 104.6 per cent from N4.663billion inn 2022.

The substantial growth in profit before tax can be attributed to the higher growth in revenue relative to the growth in cost of sales.

With about N3.23billion tax expenses in 2023 from N1.77 billion in 2022, Transcorp Hotels closed 2023 financial year with N6.25billion profit after tax in 2023 as against N2.86 billion reported in 2022.

On the backdrop of improved performance, the Board of Directors had recommended an interim and final dividend of N2.05 billon (2022: N1.33 billion) equivalent to 20 kobo per ordinary share for the year ended 2023.

Commitment to excellence

Transcorp Hotel is aiming at improving its revenue and is expected to launch a 5,000-capacity event centre purpose-built to host local and international entertainment, conference, and exhibition events. 

This new world-class facility located within the premises of Transcorp Hilton Abuja is scheduled to open in the second half of 2024. 

“I am immensely proud of the team’s dedication, resilience, and unwavering commitment to excellence, in providing an unparalleled hospitality experience,” The Managing Director/CEO, Transcorp Hotels, Dupe Olusola had said. 

Reacting to H1 2024 performance, she said in a statement that the company continued to deliver excellently on its record Q1 financial results, and further driving its second-quarter performance to new levels, achieving a combined strong half-year performance, with 61 per cent revenue growth, setting another performance record.

 “Revenue Per Available Room increased nearly 60 per cent compared to the first half of 2023 due to an increase in both group and transient demand at our flagship property, Transcorp Hilton Abuja, even as our leisure business continues to wax stronger,” she said.    

 “As we continue to combine our high standards with operational excellence, execution, exceptional guest experience and consistent financial discipline, we are confident in our ability to keep growing in line with our strategic objectives and delivering long-term value to all our stakeholders.”

 “We are excited about the launch of our upcoming 5,000-capacity event centre later this year,” she added. 

This world-class development is expected to attract both regional and international events to Abuja, positioning Nigeria to get more share of the global Meetings, Incentives, Conferences and Exhibitions (MICE) industry estimated at $802.59 billion in 2023, thereby contributing to the nation’s economic growth.

Chairman, Board of Directors, Emmanuel Nnorom stressed that the Company’s exceptional performance in the first half of the year underscores its resilience and strategic foresight in navigating the dynamic hospitality landscape. 

He added, “The interim dividend is a testament to our robust financial health and our unwavering commitment to rewarding our investors. It also signifies confidence in our growth trajectory. As we look ahead, we are confident that Transcorp Hotels will continue to thrive, setting new industry benchmarks in line with our mission of redefining hospitality in Africa.”