• Business - Companies
  • Updated: November 04, 2020

Financial Crisis: Ikeja Hotel Set To Lose N4.63billion Over Faceoff With Lagos State

Financial Crisis: Ikeja Hotel Set To Lose N4.63billion Over

Ikeja Hotel is fighting two battles at once, one against the Lagos State Government, and the other against continuous revenue loss. AllNews gathered Ikeja Hotel is battling to prevent the loss of its property, which could cost its shareholders and the hospitality business NGN4.63 billion.

The owners are on the verge of losing one of its hotels to the Lagos State government following the revocation of right of occupancy on Ikeja Hotel land, which is situated at Opebi Gorge, Ikeja, area of the state. Ikeja Hotel is not just at risk of losing its property and billions of naira, but also lose compensation as well.

Why Lagos State Revoked Ikeja Hotel's Right Of Occupancy?

There are several reasons a state government could revoke the right of occupancy of a business or individual. In the situation of Ikeja Hotel, according to findings by AllNews, Country Hills Attorney stated that the following could trigger the revocation;

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(1). Revocation on grounds of breach of the provisions contained in the certificate of occupancy. See Section 28(5)(a) Land Use Act.

(2). Breach of terms contained in the certificate of occupancy or any special contract made under section 8 of the Act. See Section 28 (5) (b) Land Use Act.

(3). Revocation on grounds of refusal/neglect to accept and pay for a certificate issued in evidence of a right of occupancy. See Section 28(5)(d) Land Use Act.

Ikeja Hotel To Fight Revocation

Ikeja Hotel said it is prepared to address the land dispute with the Lagos State Government in court, as the company has taken legal action to reverse the decision, "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." The company said in a statement seen by AllNews.

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Ikeja Hotel's Battle To Exit Financial Crisis

AllNews had reported that the company recorded a loss of NGN404.1 million in three months of Q3 2020, outlining the disastrous performance of the company this year. Also, AllNews gathered that Ikeja Hotel revenue fell by -78.9% as the company generated NGN697.1 million in Q3 2020, failing to surpass the NGN3.3 billion revenue generated in the same period last year.

During the same period ended September 2020, Ikeja Hotel recorded NGN1.4 billion loss after tax, worsening the financial crisis the company is currently in. The poor outing of the company in 2020 - which is due to the COVID-19 pandemic, which led to about four months lockdown of hospitality business - will cost shareholders dividends this year, as Ikeja Hotel stated that the pandemic will likely affect declaration of dividend.

"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,  and  is  likely  to  affect  declaration  of  dividend  for  the  Year  ended December 31, 2020."

The company, however, said it is putting in work to ensure Ikeja Hotel exit the loss path it is currently on, "Ikeja Hotel Plc (the Company) is responding to these challenges in order to return the business to profitability." The statement seen by AllNews reads.

Note that Ikeja Hotel is the owner and shareholder in Sheraton Lagos Hotel and Federal Palace Hotel and Casino.

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