PHILLIMON MHLANGA
Listed hospitality concern, Rainbow Tourism Group (RTG) posted a 478% increase in profit to ZWL$237m in the 12 months to December 31, 2019, despite facing severe macroeconomic headwinds.
This was against a profit of ZWL$41m reported in the prior comparative period.
Other financial metrics also show improvements with the group’s revenues soaring 62% to ZWL$454.6m during the period under review from ZWL$279.8m in 2018.
RTG’s foreign revenues continued to provide a stable base for the company’s income, increasing marginally by 1% from US$11.1m in 2018 to US$11.2m in 2019.
The e-commerce channel, which remains a critical source of foreign revenue growth, increased by 10% to US$2m from US$1.8m in 2018.
The average daily rate grew by 740% from ZWL$85 in 2018 to ZWL$714 in 2019.
Revenue per Available Room, which is a product of occupancy and average daily rate closed at ZWL$347 in 2019 from ZWL$53 during the prior year.
Earnings before interest, tax depreciation and amortisation (EBIDTA) closed at ZWL$161m, an improvement of 113% from ZWL$75.5m recorded in the same period in 2018.
The growth in historical terms was 623% above ZWL$9.3m in 2018.
The group’s EBITDA margin for the year grew by eight percentage points from 27% in 2018 to 35% in 2019.
Profit before tax for the year grew six times from ZWL$45m to ZWL$256m recorded during the prior year.
Historical profit before tax grew by more than 10 times from ZWL$5.6m to ZWL$58.8m.
The group’s occupancy, however, went down by 14 percentage points to 47% during the period under review, from 61% recorded in 2018.
RTG board chairman Arthur Manase said the slowdown in occupancy was a result of the group’s decision to close Bulawayo Rainbow Hotel in January and February 2019 and its flagship hotel Rainbow Towers from mid-December 2019 for refurbishments.
The impact of these closures, Manase said was a loss of 12,100 rooms (4% occupancy).
On a like-for-like basis occupancy closed at 51% above the national average occupancies of 41% reported by the Zimbabwe Tourism Authority in its third quarter of 2019 report.
RTG invested about ZWL$42m on refurbishments.
“The group’s product refurbishment plan has been underpinned by the desire to make our entire hotels worldleading,” Manase said.
He added: “To that end, the group invested ZWL$42m (approximately US$6.2m) into hotel refurbishment in 2019.
“During the first quarter of the year, the Bulawayo Rainbow Hotel was temporarily closed in an exercise which involved the upgrade of bathrooms, full replacement of the hot and cold water reticulation system, replacement of exterior windows, upgrade of soft furnishings in rooms and the replacement of guest elevators.
“At the Rainbow Towers Hotel, the company has undertaken a rebuilding exercise involving the gutting down and reconstruction of the entire guest rooms and bathrooms for 187 rooms.
“It is pleasing to note that the Rainbow Towers refurbishment exercise was completed within two months, which is a very short period given the nature of the work.
Going forward, the Group will continue with the refurbishment exercise to complete the process of making all the hotels worldleading.”
The group recovered US$1.9m owed by Capital Bank (formerly Renaissance Merchant Bank). Recovery was in the form of 3.6% of the issued shares in First Mutual Holdings Limited.
RTG also recovered US$900,000 owed by Savoy Hotel Limited in Zambia which had arisen out of a breach of 2010 preference share subscription agreement and a management agreement.
“Closure of these matters has ensured shareholders recover their lost value and the focus is now on growing shareholder value into the future,” Manase said.
Meanwhile RTG has temporarily closed down all its hotels in response to government’s directive for a 21-day lockdown which came into effect on Monday last week.
Government announced a number of measures to protect citizens from the coronavirus pandemic.
These include banning entertainment centres, pubs, the gathering of more than 50 people, among many.
The company said the closure will have a significant impact on the group’s month of April 2020 revenues which traditionally accounts for 6% of the total annual revenues.
