Ikeja Hotel Plc has announced a loss of N1.4 billion in the third quarter ended September 30, 2020.
Key extracts of the results released on the Nigerian Stock Exchange (NSE) showed that loss after tax stood at N1.4 billion in Q3 from a profit after tax of N429.136 million in 2019.
The company in a statement explained that the loss after tax of N1.4 billion recorded by the group in the third quarter financial statements was due to the continued effects of the COVID-19 pandemic on the hospitality sector.
The company also noted that this is likely to affect declaration of dividend for the year ended December 31, 2020, saying that Ikeja Hotel is responding to these challenges in order to return the business to profitability.
It added that “The Company received a letter dated October 15, 2020 from the Lagos State Government, purportedly revoking its right of occupancy on its land situated at Opebi Gorge, Ikeja, Lagos. The Company has taken legal action to contest this revocation. However, the revocation has the potential to impair the assets of the Group to the tune of N4.63 billion if the government succeeds.”
Capital market analysts said hotels in Nigeria are facing an existential crisis that could force some of them to collapse on the weight of rising operating expenses, without any revenue to absorb.
According to them, reports have shown that the sector was seriously affected by the fall out of the COVID-19 induced lockdowns. The dire state of their financials has forced some of the hotels to consider massive job cuts, and cost reduction measures in a bid to survive. For most of them, it is either they take drastic actions, or face the consequences associated with piling losses and unpaid debts.
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Since the breakout of COVID-19 in March 2020; the federal government approved lockdown in Abuja and Lagos State, forced all the major hotels to shut down, a bitter sacrifice by the hospitality sector, as the government sought to contain the spread of the virus.
Meanwhile, Ikeja Hotels posted a revenue decline of 60.49 per cent to N3.603 billion as against N9.119 billion achieved in Q3, 2019. Costs of sales down to N3.531 billion from N6.569 billion, while gross profit for the period stood at N71.565 million, compared to N2.550 billion in 2019.
Total assets for the Company went up to N46.476 billion in Q3, 2020 from N38.671 billion as at December 31, 2019.
Ikeja Hotel stated that “The devastating effect of COVID -19 pandemic on the performance of the company continues to reflect in the Q3 results, in spite of the strategic response of the management to reverse the losses caused by COVID-19 lockdown in the second quarter.