BUSINESS REPORTER
Victoria Falls Stock Exchange-listed hospitality group, African Sun Limited (ASL), reported depressed performance in the quarter to March 31, 2023, but has signalled optimism the forthcoming elections could drive high traffic into its hotels across the country.
Zimbabwe is expected to hold harmonised elections in the second half of the year. President Emmerson Mnangagwa is, however, yet to announce the dates of the elections.
The optimism by ASL comes despite the hospitality group suffering an 8-percentage points decline in occupancy levels in the period under review to 39% from 42% in prior comparative period.
Revenue for the group declined to US$7.9m in the period under review, reflecting a 2% decline from the prior comparative period.
“We anticipate improvements in occupancies at many of our hotels driven largely by election business and remaining “pent-up” demand arising from overdue events and conferences,” ASL company secretary Venon Musimbe said.
He added: “In addition, we expect to see continued improvements to business and corporate transient demand as businesses continue to make progress towards normal travel patterns including a perceptible acceleration in international travel, particularly for our Victoria Falls hotels.”
The group adopted US$ as its functional currency effective January 1 2023 due to its migration to VFEX.
“Both of our hotel operating segments experienced declines in occupancy levels with City Hotels posting a combined 51% while resort hotels achieved 23%.
“Despite the waning impact of Covid 19 and the concomitant announcement by the World Health Organisation that it was no longer a public health emergency of international concern, foreign business remains depressed at 20% whilst domestic guests anchors business performance with a contribution of 80%,” Musimbe said.
He said in line with the group’s strategy to exit non-core assets, ASL successfully exited its investment in Dawn Property Consultancy (Private) Limited during the quarter under review.
ASL remained focused on its strategy to upscale the state of its properties through ongoing various refurbishment programmes in line with its vision to be the leading provider in hospitality and leisure operations in Africa by providing outstanding hospitality experiences.
“The group anticipates completing the US$4.2m Hwange Safari Lodge refurbishment during the second quarter of the current year,” he said.
The Zimbabwe dollar liquidity crunch persisted during the quarter under review, which combined with other factors led to the economy being substantially United State dollar-driven.
The Reserve Bank of Zimbabwe in its first monetary policy statement of 2023 advised that approximately 76% of transactions in the local economy are now being conducted in US$.
The group witnessed its revenue and expenditure notably skewing toward US$, with monthly averages of 60% and 40% of the group’s revenue being earned in United States dollars and Zimbabwe dollars respectively.
The foreign currency liquidation exemption, which the tourism sector enjoyed since February 2022, expired during the quarter.
“The disparity between the parallel market exchange rate and the official exchange rate continues to exert pressure on operating margins as there is a notable mismatch between the exchange rate used by suppliers and the exchange rate used to liquidate foreign currency into Zimbabwe dollars and required for the pricing of goods and services in Zimbabwe dollars ,” Musimbe said.
He said the group would continue to monitor and respond to the unique challenges and opportunities presented by the current operating environment.
