COVID-19: Transcorp Hotels to reduce workforce by 40%

The management of Transcorp Hotels has announced that it will reduce its workforce by 40 percent due to the impact of the COVID-19 pandemic on the hospitality business.

Addressing journalists on Thursday, Dupe Olusola, the managing director, said the hotel is looking to restructure its business strategy and optimise operations.

She said all executives of Transcorp Hilton in Abuja have also taken a pay cut as part of cost-saving strategies.

Since the novel coronavirus was discovered in China in December, various countries imposed movement restrictions to control the spread of the virus and offices shut down, resorting to virtual operations.

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 has 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.