Acquisitions power RTG’s performance

BUSINESS WRITER

Rainbow Tourism Group (RTG), a publicly traded hospitality group, delivered a strong full-year performance, underpinned by an aggressive acquisition drive that expanded its asset base, lifted volumes and consolidated market share, Business Times can report.

The group’s recent acquisitions, including Montclair Hotel and Casino in Nyanga, MSK House in Cape Town, South Africa, and Batoka Safaris in Victoria Falls, have emerged as key growth drivers, strengthening both revenue streams and strategic positioning across regional markets.

RTG board chairperson Douglas Hoto said the group’s financial position remained robust, with total assets rising 28% to US$82.7m, up from US$64.5m in the prior year.

“This growth was driven primarily by the strategic acquisition of assets, namely Montclair Hotel and Casino in Nyanga, MSK House in Cape Town, South Africa, and Batoka Safaris, a destination management entity based in Victoria Falls,” Hoto said.

The group recorded solid top-line growth in FY25, with revenue increasing 13% to US$50.3m from US$44.4m in FY24, supported by innovative strategies and the continued strength of its diversified hospitality and tourism portfolio.

Hoto noted that the newly acquired units were swiftly integrated into operations, contributing meaningfully to performance.

“Montclair Resort and Conference Hotel was incorporated into operations effective March 1, 2025. Batoka Safaris was consolidated into the group’s revenue from June 1, 2025. Both entities contributed 8% of total group revenues,” he said.

RTG chief executive Tendai Madziwanyika said the results reflect a deliberate and resilient commercial strategy.

“These results illustrate a robust commercial strategy that enabled RTG to dominate volume and market share while maintaining a strong revenue base,” Madziwanyika said.

“The growth reflects the group’s deliberate, diversified strategy and its ability to respond quickly to changing market dynamics. Our resilience stems from not relying on a single revenue stream and our ability to continuously innovate and adapt.”

He added that internal efficiencies and cost management initiatives were beginning to translate into improved margins.

“We have been very deliberate about managing our costs while also improving operational efficiencies, and that is starting to reflect in our margins. Initiatives such as the RTG Agro project — where we now produce key fresh items like vegetables — are significantly reducing costs while enhancing quality for our guests,” he said.

RTG also benefited from a surge in foreign currency earnings, driven by increased international travel and conferencing activity, particularly in Victoria Falls.

“The increase in foreign currency earnings is driven by stronger international travel and growing conferencing activity. The acquisitions we made this year are part of a broader strategic plan to position the business for future growth,” Madziwanyika added.

Hoto said the group’s strategic investments had strengthened its valuation and enhanced investor confidence.

“These investments have not only reinforced RTG’s market position but also improved its overall valuation. We are optimistic about the year ahead, supported by strong demand, a strengthened portfolio and a solid foundation for growth,” he said.

However, the expansion came with a short-term cost impact. The group incurred US$1.6m in acquisition-related expenses during the year, weighing on earnings.

“As a result, EBITDA closed at US$7.9m compared to US$9.7m in 2024. Despite this temporary impact, the acquired assets are expected to drive revenue growth and support margin expansion in future periods,” Hoto said.

Profitability metrics nonetheless improved, with gross profit margin rising to 74% from 70%, supported by stringent cost controls and operational efficiencies.

“The group achieved a strong uplift in profitability margins during the year, driven by disciplined cost management,” Hoto said.

The performance was achieved against a challenging operating environment marked by liquidity constraints and reduced NGO-related business following the withdrawal of donor funding by key international partners.

Despite these headwinds, RTG posted double-digit growth, with foreign currency earnings increasing 28% to US$24.1m from US$18.9m in 2024.

Operational metrics also strengthened, with occupancy rising to 57% from 54%, despite the temporary loss of approximately 3,200 room nights due to refurbishment programmes across key properties.

Average Daily Rate (ADR) improved to US$109 from US$102, while Revenue per Available Room (RevPAR) rose 13% to US$62, reflecting sustained demand across the group’s portfolio.

Beyond its core hotel operations, RTG continues to diversify through subsidiaries such as Heritage Expeditions Africa and Gateway Stream, Zimbabwe’s leading digital marketplace for travel, accommodation and retail services. The group also maintains a regional sales and marketing office in Johannesburg to drive international business.

Through sustained investment in infrastructure, technology and sustainability, RTG is positioning itself at the forefront of Zimbabwe’s tourism sector, playing a pivotal role in driving economic growth, foreign currency generation and employment creation.