The epileptic electricity supply in the country, which has impacted negatively on many businesses has taken a toll on Transcorp Hotels Plc, Abuja, forcing the hospitality giant to cough out about N1.5 billion in energy cost in 2021.
However, in spite of the humongous amount spent by the hotel on energy, it was able to close the year 2021 with an impressive gross revenue of N22 billion, up by a massive 100 per cent relative to the N10 billion recorded in 2020.
This was disclosed by Mr Emmanuel N. Nnorom, Chief Executive Officer of Heirs Holdings Group and Chairman of Transcorp Hotels Plc, at the company’s Annual General Meeting held Monday in Abuja.
Reacting to how the about NI.5 billion spent on energy by the hotel impacted the business, Mr Nnorom said: “Energy is our biggest cost because we have 670 rooms in this hotel and continuously we have to ensure that there’s adequate power not only for the guests but also for other facilities.
“There are customers in this promise also and everybody needs power. It is our biggest cost; it’s going to rise because we all know that the price of diesel has gone up. Also in a way, the power cost is also up, but we will continue to do well to have good returns for our shareholders.”
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On whether Transcorp Hotels Plc is looking at an alternative source of energy like solar to power its facilities, Mr Nnorom said such plans were on the offing to power some facilities while the main hotel building would still remain on the National grid.
“Yes, we have plans for that but it’s not something that will take the whole hotel out completely from the grid. It’s going to be some distributed areas. We have an event centre coming up that could be powered by solar and Fulani Bar, where we have some level of a stand-alone unit. But for the main hotel building, it’s still on the National grid.
“We are working very well with the Abuja Electricity Distribution Company (AEDC) and having adequate power but there’s a lot of costs,” the Chairman of Transcorp Hotels Plc, explained.
He stressed that the Hotel would continue to maintain a reasonable price for its customers, in spite of the high cost of energy it has incurred.
“Not so much in terms of the price of the rooms and other services; we will maintain reasonable prices, the power cost notwithstanding because there is a limit to what we can peg. We can always make income from other sources.
“We have exchange rate issues, inflation, increased cost of diesel, etc. We have looked proactively at how to ensure that we manage the resources of the hotel very well; from such, we are going to make quite a lot of savings.
“We are also looking at substituting some of the items that hitherto were imported by looking for local, quality, acceptable alternatives, with all that in place, we will be able to cope with the increase in cost, ” Mr Nnorom reassured.
Mrs Dupe Olusola, Managing Director/CEO Transcorp Hotels Plc said the company also surpassed its pre-COVID 2019
revenue of N20 billion by about 8 per cent.
“This great progress reflects the growth achieved in most of our business segments and the strengthening of our leisure
business. We became more innovative in our leisure business segment as a response to the COVID-19 pandemic which was a key success factor for us in 2020. We pushed further in 2021 and grew revenues from this segment by 118 per cent from N1.7 billion in 2020 to N3.7 billion at the end of 2021,” Mrs Olusola stated.
Transcorp Hotels Plc recorded a 142 per cent year-on-year growth in Gross Profit in 2021 as compared to 2020, to close at N16.2 billion.
A gross profit margin of 75 per cent was achieved in 2021 representing an improvement of 900 basis points from 2020.
Mrs Olusola pointed out that “despite the rise in inflation rate and Naira devaluation, and the resultant high energy and rising raw material cost, we continued to drive our cost management imperatives, chief of which was our focus on import substitution in response to the volatile forex regime.”
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