Transcorp Hotels Plc, the hospitality subsidiary of Transnational Corporation Plc has defied the challenging operating environment to post impressive corporate earnings on innovations, which has led to renewed demand for the stock by investors, writes Kayode Tokede
Transcorp Hotels Plc posted the highest capital appreciation on the Nigerian Stock Exchange (NGX) in 2023 as its share price jumped from N6.25 per share to close at N70.18, showing an increase of 1,022.9 per cent. Its market capitalisation rose to N718.8 billion at the last trading day of 2023. With the 1,022.9 per cent appreciation, Transcorp Hotels emerged the best performing stock on the NGX in 2023.
While it was expected that profit-taking by some investors may lead to slide in the stock price in 2024, more investors have continued to swoop on the stock, thereby leading to further jump in the share price. The stock price in 2024 has soared to N100 per share, representing 42.49per cent compared with the N70.18 per share it opened for trading this year. Again, the increase has outperformed the overall market index that has gained 26.43 per cent as at last Friday.
Also, the company’s market capitalisation so far this year has gained N305.43 billion to cross the N1trillion mark and it is expected to increase further when 2023 results and dividend payout are declared to investing public. The company witnessed increased investors demand when it declared consistent growth in financial performance.
Analysts believe the renewed demand for the shares of Transcorp Hotels may not be unconnected to the confidence investors have in the company’s ability to weather storm after recovering from the loss it posted during the COVID-19 pandemic.
Despite the highly competitive hospitality industry, Transcorp Hotel has shown resilience and posted impressive results since 2022.
For instance, the company in 2022 financial year ended December 31, 2022, declared a resounding performance, driven by the management’s effective strategy and innovations.
Transcorp Hotels reported N31.44billion revenue in 2022 financial year, an increase of nearly 47 per cent from N21.42billion in 2021, driven by 61 per cent or N19.15billion contribution from Transcorp Hotels room revenue in 2022.
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.
The group’s cost of sales hits N9.05billion in 2022, an increase of 64 per cent from N5.51billion reported in 2021.
Transcorp Hotels N3.37billion spent maintaining room and N4.85billion food and beverages were the overall drivers of cost of sales in 2022.
This brings the group’s gross profit to N22.39billion in 2022, an increase of 41 per cent from N15.9billion reported in 2021.
As operating expenses stood at N14.63billion in 2022, an increase of 31.8per cent from N11.1billion in 2021, operating profit grew by 51.1 per cent to N8.66billion in 2022 from N5.73billion in 2021.
The group’s operating expenses was driven by N2.33billion energy cost in 2022 from N1.68billion in 2021 and N2.2billion Employee costs in 2022, an increase of 31.2 per cent from N1.67billion reported in 2021.
The group’s bottom-line performance showed a resilient result and accounts with N4.53billion profit before tax in 2022, an increase of 172 per cent from N1.66billion in 2021.
With about N1.91billion tax expenses, Transcorp Hotels closed 2022 financial year with N2.62billion profit after tax as against N1.12billion reported in 2021.
Amid impressive 2022 performance, the company paid shareholders a dividend of 13 kobo per share, amounting to N1.33billion as against N716.98million paid to shareholders in 2021 financial year.
Investors are warming up for another impressive performance for the 2023 financial year, having seen a positive nine months results ended September 30, 2023.
Its nine months ended September 30, 2023, Transcorp Hotels sustained growth momentum with 62per cent profit growth.
Also, the leading hospitality brand sustained strong growth, recording 31.76per cent growth in revenue to N29.9billion from N22.7billion the previous year, and significantly higher than pre-COVID-19 performance.
Specifically, nine months’ profit grew by 62per cent to N5.5billion from N3.4billion. The results reflect the company’s commitment to delivering exceptional value to its stakeholders and sustaining its growth momentum.
Transcorp Hotels revenue for the period ended September 30, 2023 was N29.9billion, signifying a 31.76per cent increase from N22.7billion in September 30, 2022. Profit grew by 62per cent to N5.5billion, from N3.4billion by the end of September 2022.
Average Daily Rate (ADR) increased by 38percent to N134,739 from N99,390 during the same period in 2022. Revenue per Available Room (REVPAR) grew to N106,244 by the end of September 2023 from N77,428 at the end of September 2022, a 34percent increase.
Transcorp Hotels also continues to maintain its strong leisure business, setting the pace with excellence in the delivery of both business and leisure offerings, as the importance of the leisure segment expands in the industry.
Commenting on the performance, the Managing Director/CEO of Transcorp Hotels, Dupe Olusola said: “This consistent financial upswing reinforces our dedication to excellence and resilience in the face of economic challenges. We have remained nimble, adapting quickly to meet the dynamic preferences of our guests”.
According to Olusola, the company continued to experience strong performance in its International Business Travel segment, as it took advantage of renewed investor confidence in the Nigerian economy as a new government resumed office.
“Transcorp Hotels also continues to maintain its strong leisure business, setting the pace with excellence in the delivery of both business and leisure offerings, as the importance of the leisure segment expands in the industry,” she said.
Transcorp Hotels is one of Africa’s leading hospitality companies, committed to redefining hospitality standards.
The company’s hotels include the award-winning Transcorp Hilton Abuja and Transcorp Hotels Calabar. It also owns Aura by Transcorp Hotels, an online platform for booking homes, hotels and memorable lifestyle experiences.
Going forward, according to the company, it plans to inaugurate a 5,000-seater capacity event centre in Abuja by the first quarter (Q1) of 2024. Transcorp Hotels Plc also plans to build a five-star hotel in the upmarket Ikoyi neighbourhood of Lagos.
The decision, the CEO had noted earlier this year is part of the broad plan to sustain post-pandemic recovery after covid lockdowns tipped the hospitality firm into a brief but substantial loss in 2020.
The facility is planned as a 300-room hotel towering 20 storeys alongside a 21-storeyed office block, with construction cost estimated at $110 million.
“We are expanding to Lagos, Ikoyi Glover and this is going to be phenomenal, a five-star hotel that offers accommodation, event space, restaurant, health & fitness, everything,” she had said.
