The Tourist Company of Nigeria, which owns and operates the Federal Palace Hotel in Victoria Island, Lagos reported a loss for the 2nd consecutive year following lower room occupancy, reduced food and beverage revenue, and higher costs caused by the weakening Naira. The company made a loss of N5.6bn for the financial year ending June 2016, up from a N2.3bn loss in the preceding year. The loss includes an unrealised loss on shareholders loans of N5bn and an unrealised foreign exchange loss of N2.2bn in the previous year as the loans are denominated in US Dollars.
Gross profit from the Casino and Hospitality segments the company operates in fell 21% and 11.8% respectively. The increased costs the Hotel faced during the period could not be passed on to customers as a result of the increasingly aggressive competition.
During the period, the Tourist Company of Nigeria also continued to battle with the long-standing shareholder dispute, which also had a negative impact on the business.
Earlier this year, South African investors, Sun International noted that they would be divesting from the Tourist Company of Nigeria. In a statement released in August, Sun International explained that aside macro economic issues facing Nigeria, issues specific to the local Nigerian partners in the Federal Palace exacerbated the problems. They explained that they would be exiting the investment they made in 2009 and 2010 and steps would be taken to achieve this in a manner that did not erode further value.
Find out more about the sale price, transaction highlights, occupancy rates and key data points regarding the sale of Federal Palace Hotel to Sun International in 2009 & 2010 with ei Sale Reports.