Hospitality group African Sun Limited has fully integrated and taken over the management of its hotels which were previously put under third party management by South African group Legacy Hospitality Management Services Limited.
African Sun last year terminated a deal it entered into over three and a half years ago with Legacy to manage five of its local hotels.
The was touted as the best move towards improving profitability, growth and visibility of the hotels in September 2015, the deal entailed a US$60m facelift of the properties.
The five hotels which were put under Legacy management and were then re-branded include Elephant Hills in Victoria Falls, Monomotapa in the Harare, Troutbeck Resort in Nyanga, Hwange Safari Lodge and the Kingdom at Victoria Falls Hotel.
In a statement accompanying the group’s half year to June 30 results, board chairman Alex Makamure noted that the completion of the termination was still undergoing through a legal process.
“The Legacy matter is still going through legal processes.
However, it is important to note that this termination is having limited impact on the group’s operations.
The group has fully integrated and taken over the management of the hotels previously under third party management,” Makamure said.
Makamure said the promising performance recorded in the first quarter was diluted by the subdued performance of the second quarter due to the Covid-19 pandemic which resulted in the closure of hotels.
Inflation adjusted revenue for the period was down 48% at ZWL$461.85m split as 63% and 37% between domestic and foreign currency respectively.
Occupancy closed at 22%, a significant reduction of 23 percentage points compared to 45% recorded in the same period last year.
Room nights sold dropped by 52% to 63 116 from 132 525 reported last year.
According to Makamure, the decline in room nights was across all market segments, with export and domestic reducing by 62% and 49% respectively mainly due to the Covid-19 lockdowns and the related reduction in travel and tourism, resulting in the complete or partial suspension of hotel operations.
The decreases in revenue and volumes resulted in the group posting inflation adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization loss of ZWL$53.61m while turning to liquidity, a number of actions were taken, including the suspension of our refurbishment programme, to preserve cash and increase our financial flexibility resulting in the group having total cash and equivalents of ZWL$466.57m as at June 30 2020 compared to ZWL$519.93m as at December 31, 2019.
“As we look at the remainder of the year, we are confident that we have enough liquidity to continue to navigate the current environment and prepare for recovery,” Makamure said.
Makamure said the Covid-19 pandemic represents the most significant challenge that our industry has ever faced and the group’s key source markets such as Europe, the Americas and South Africa are among the worst affected.
In May, the group took a decision to reopen its hotels on a phased approach following the easing of lockdown measures.
Under phase one, four hotels (Holiday Inn Harare, Holiday Inn Mutare, Holiday Inn Bulawayo and Great Zimbabwe Hotel) were reopened on May 11, 2020.
Subsequently, Troutbeck and Caribbea Bay Resorts were opened under the second phase on July 1 2020 and 1 August 2020 respectively.
As the business positions itself to benefit from the reopening of the economy, the group reopened Monomotapa Hotel and Elephant Hills Resort and Conference Centre on September 1 and 14 respectively under phase 3.
The group will embark on the last phase of the reopening programme, focusing on the remainder of the Victoria Falls properties, in the current quarter.