By Almot Maqolo.
HARARE – Hotelier, African Sun says volume performance for the first three months of 2020 were in line with expectations as it projects a positive travel outlook in the second half of the year which will dilute the losses of the first half.
This is in spite significant headwinds in the economy which make it difficult to forecast business performance, particularly business from the domestic market.
Like any other sector, the travel and tourism industries was not spared from the effects of Covid-19 pandemic. But, a total of ZWL$500 million in government guarantees has been put in place for tourism sector players to access working capital loans from banks.
The number of new cases continues to surge in the region and some parts of the world, particularly in Europe and the Americas which are key source markets for the group. Zimbabwe and other regional countries like South Africa have implemented nationwide lockdowns to combat the spread of Covid-19.
Also, many countries have grounded their airlines, implemented travel restrictions and quarantine measures in a bid to contain the impact of Covid-19 and flatten the curve.
The World Travel and Tourism Council has warned that COVID-19 pandemic could adversely impact travel and tourism by up to 25% this year an equivalent of three month tourism activity.
African Sun temporarily closed all its eleven hotels and two casinos effective 30 March 2020. However, the move will be assessed after the lockdown period with a view to reopen some of the hotel, especially the city hotels.
“These measures are weighing on the company’s international business outlook and expected to result in cancellations of bookings or deferrals without concrete dates. Our current statistics have shown that we have had 14 512 room nights cancelled, with a total revenue amount of US$4 219 491 by 24 March 2020,” said group chairman Alex Makamure in a statement accompanying the results.
As the outbreak continues to evolve, he said, it is challenging at this point, to predict the full extent and duration of its business and economic impact.
“However, we expect the remainder of the first half of 2020 to be severely impacted causing a permanent dent to the 2020 financial performance. The second half is forecasted to have better performance as the pandemic is expected to be under control on the back of lockdowns and isolation measures.”
The company will continue to target sales and marketing initiatives in the second half to support and promote international and regional tourism as it anticipate the domestic market to remain subdued.
“With regards to revenue earning capacity and net-unit growth goals, the Group has completed two campsites at Great Zimbabwe, and Caribbea Bay Hotel with a combined capacity of 75 rooms accommodating a maximum of 150 people,” he said.
In the first quarter, the hotelier launched Sun Leisure Tours (a touring division) with the initial investment directed to Victoria Falls and Bulawayo. Also, the company is working on resourcing Harare.
Group inflation adjusted revenue for FY19 rose 68% to ZWL914 million due to a rise in average daily rate (ADR). ADR grew by 102% from ZWL869 previously to ZWL1 759 as the hotels continued to align room rates with interbank exchange rate during the year.
Occupancy closed at 48% compared to 59% recorded in 2018.
Room nights declined 15% from 214,892 reported in 2018 to 181,698 owing to January 2019 protests and low disposable incomes. Foreign room nights fell by 21% from 134,639 in 2018 to 106,526.
Net financing costs increased by 83% to ZWL8.8 million from ZWL4.8 million previously. This was attributable to lease liabilities as finance costs on borrowings declined by 93%.
After tax profit was up two fold to ZWL187.04 million from ZWL57.21 million.
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