Transcorp Hotels, owners of one of Nigeria’s largest hotel Transcorp Hilton reports it loses about N1 billion every month due to the Covid-19 pandemic.
This was disclosed by the Managing Director/CEO of Transcorp Hotel Plc, Dupe Olusola, during an interactive session on Thursday. According to her, the management of the hotel met and decided to ensure that it kept costs down by restructuring its business strategy, diversifying into asset-light business models, and reducing the workforce, among others.
Olusola further disclosed that the company had suspended further commitment to buy fixed assets and operating equipment, as well as reduced its energy consumption and maintenance costs. She also confirmed Transcorp will be cutting back on all capital investments this year and in the foreseeable future until the outlook for the economy improves.
The hospitality sector has been one of the hardest-hit since the Covid-19 broke in late February. Data from the National Bureau of Statistics also reveal the sector contracted by as much as 40% in the second quarter of 2020, officially falling into recession.
According to Olusola, the occupancy level at the hotel dropped to its lowest of less than five percent.
“The impact of COVID-19 on the business is like nothing the company has ever witnessed. The hotel and hospitality industry in Nigeria have never faced a crisis that brought travel to a standstill, including the Ebola Virus Outbreak of 2014 and the recession of 2015,” she said.
“The slow pick up of international travel, restriction on large gatherings, the switch to virtual meetings and fear of the virus, has drastically reduced demand for our hotels and occupancy levels to its lowest of less than 5%.”
The managing director said staff were paid full salaries in March and April when the lockdown first began and has had to adopt several cost-saving initiatives since then.
“Despite the losses incurred we have fulfilled our obligations to staff. At the inception of the pandemic, we maintained a 100% salary payment to our over 900 employees in March and April. We also activated various cost-saving initiatives such as renegotiations of service contracts and restructuring of our loans.
“We suspended further commitment to buy fixed assets and operating equipment as well as reducing our energy consumption and maintenance costs. Despite undertaking these, it has become apparent that more fundamental changes need to be made for the business to survive.
“To this end, our workforce headcount will be reduced by at least 40%, and our reward system will be optimized.”
Olusola explained that compensation negotiations are ongoing with impacted staff adding that a health insurance package will be included to reduce their health burden costs.