CAPITAL HOTEL PLC's HARD SELL

Capital Hotel PLC, owners of Abuja Sheraton, sure engaged in hard sell in 2015 but it bore limited fruits. Instead, the more effective shoulder to the wheel turned out to be non-core business income.
According to the audited results released recently, Capital Hotel spent N319.2m on sales and marketing in 2015, up 251.9% on the far smaller N90.7m in 2014.
However, it did not result in immediate leap in revenue especially the core one. Revenue from main hospitality business grew by only 3.1% to N4693m in spite of the relative splash on marketing and sales and total revenue rose by 5.48% to N5011.6m
This was followed by 3.73% increase in cost of sale to N3355.1m .
Thus Capital Hotel would have ended 2015 with lots of regret but for the 11.9% decrease in administration costs to N667.1m; 67.7% rise in income from other operations to N249.7m from N149m and 37% increase in finance income from N50.3m to N68.9m
All they did however, was cushion the full effect of the sales and marketing splash to allow Capital Hotel close the year almost at par with 2014 in terms of profit relative to total income.
The closing profit margin was 13.4% compared to 14.1% in 2014.
For Capital Hotel 2016 will be a better year for two reasons: Its liquidity position closed strong enough to help boost finance income some more and the splash on marketing may bear more fruits.
SO:
* With a little control over marketing. 2015 performance will not be hard to surpass, all things being equal.
* Besides, the company's confidence in the future in spite of the times is well reflected in continued investment in fixed assets.

CAPITAL HOTEL PLC (Nm)
                         2015.              2014
Total income 5011.6.            4751.3
Core income  4693.0.            4552.0
Cost of sale.   3355.1.            3234.4
Gross income 1337.9.            1318.3
Other income.  249.7.               149.0
Marketing.        319.2.                 90.7
Administration  667.1.              757.6
Finance income   68.9.               50.3
PBT.                    670.1.             669.3
Profit margin %    13.4.               14.1
Working cap.   2913.2.           2853.9

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