ASL hurt by Kingdom Hotel closure
BUSINESS REPORTER
Zimbabwe’s largest hospitality group, African Sun Limited’s (ASL), says the closure of Kingdom Hotel in the resort town of Victoria Falls was detrimental to the country’s largest hospitality group, which suffered a US$1.8m loss in the six months to June 30, 2023, Business Times can report.
After failing to reach an agreement with First Capital Bank, the property’s owners, on a new term of the lease agreement, ASL left the Kingdom Hotel last year.
As a result, ASL suffered a loss of US$1.8m during the reviewed period.
About US$0.75m , or more than 41% of the total loss, was lost due to the closure of the Kingdom Hotel.
“During H1 2023, the group reported a loss after tax of US$1.81m, primarily attributed to the challenging macroeconomic environment.
Costs escalated at a faster pace than revenue, exacerbated by losses from discontinued operations.
“The loss for the period of US$1.81m was mainly due to discontinued operations, which incurred a loss of US$0.75m. This loss primarily included property and equipment impairments following the closure of the Kingdom at Victoria Falls Hotel,” ASL chairman Constantine Chikosi said.
High costs, according to Chikosi, also had an impact on the group’s performance in the reviewed period.
“Operating expenses, excluding depreciation, amounted to US$13.91m, a 36% increase compared to the prior year. This was driven by inflationary pressures and increased volumes, resulting in higher variable costs,” he said.
Revenue for the group, however, grew 2% to US$22.36m compared to the same period last year. The revenue growth was driven by higher business volumes, with hotel occupancy increasing by 5 percentage points to 46%.
Earnings before interest, tax, depreciation, and amortisation reached USD2.48m.
Chikosi said the group is actively monitoring and implementing cost-saving initiatives.
The board has resolved not to declare a dividend for this period due to the loss recorded for the half-year ending 30 June 2023 and ongoing capital expenditure on hotel refurbishments.
ASL is in discussions with local financial institutions to establish standby financing facilities for significant hotel refurbishment projects in progress.
Progress continues in this regard, with the refurbishment of the remaining 46 rooms at Hwange Safari Lodge nearing completion.
The group is focused on capital allocation for targeted hotel refurbishments to enhance the guest experience.
