ASL seeks US$8m

LIVINGSTONE MARUFU

African Sun Limited (ASL), a publicly traded hospitality group, plans to raise US$8m this year for renovations at the Victoria Falls Hotel, Hwange Safari Lodge, and Elephant Hills Hotel, Business Times can report.

Apart from Victoria Falls Hotel, Hwange Safari Lodge and Elephant Hills Hotel, ASL operates seven other hotels including Monomotapa Hotel in the capital, Caribbean Bay Resort in Kariba, Great Zimbabwe Hotel in Masvingo, Holiday Inn in Harare, Bulawayo and Mutare and Troutbeck Resort in Nyanga.

The plan was disclosed by Lawrence Ward, the ASL Acting CEO.

“Our target is to raise about US$8m in 2024 to allow for the completion of the Victoria Falls Hotel and Hwange Safari

Lodge refurbishments and to make a start on the Elephant Hills public areas,” Ward said.

He said key to the planned upgrades is the group’s ability to generate and raise adequate and affordable funding.

Ward said to enhance the competitiveness and appeal of the properties with both local and international guests, a comprehensive strategy of refurbishing targeted hotels remained a key imperative and priority.

ASL, according to Ward, spent US$7.4m  over the past few years on refurbishments and an additional US$1m  on real estate development under the Dawn Property portfolio, all of which  was funded from internal resources.

During the year 2023, Ward said:  “ASL together with its partners, Meikles

Hospitality (Private) Limited, undertook preparatory work to commence the final phase of the Victoria Falls Hotel refurbishment programme.

The group also completed the remaining 46 rooms at Hwange Safari Lodge and agreed final concepts for the public areas.

Finishing touches to Troutbeck public areas and completion of the Great Zimbabwe Conference Centre.”

Ward said the group’s performance for 2023 was reasonable, showing great recovery post Covid-19.

Revenue for the group in 2023 grew 30% to US$54.73m against the comparable period.

However, Ward said the positive gains in revenue were often eroded by even higher associated cost increases.

ASL’s top three performers for 2023 financial year were Elephant Hills, Holiday Inn Harare and Holiday Inn Bulawayo.

These contributed 53% to the group’s total revenue for the year.

The group,however, recorded a marginal profit after tax from continuing operations of US$0.52m, largely as a result of a harsh macroeconomic operating environment, characterised by costs escalating at a higher rate than revenues, compounded by material exchange rate losses triggered by the rebasing of the group’s functional currency.

“The group had a high effective tax rate for the year under review, worsened by declining values of capital allowances due to inflation,” Ward said.

The group’s operating expenses, excluding depreciation, increased by 43% to US$27.63m in 2023 compared to US$19.29m  in 2022 driven largely by exchange rate volatility, inflationary pressures, and the crystallisation of expenses in US$ as the economy continued to dollarise at a rapid pace.

The group will continue to monitor costs and implement various cost-saving initiatives.

Earnings before interest, tax, depreciation, and amortisation (“EBITDA”) was US$9.45m, down from US$17.86m in 2022, and the loss for the period was US$0.36m.

Two of the group’s hotels under external leases had their base rentals changed from Zimbabwe dollars to United States dollars and this had the downstream effect of significantly increasing the lease liability interest and right-of-use assets depreciation compared to 2022.

The discontinued operations loss of US$ 0.89m largely comprises property and equipment impairments post the closure of the Kingdom at Victoria Falls Hotel and the Makasa Sun Casino.

This follows the mutual termination of the lease at the Kingdom at Victoria Falls Hotel, due to an untenable lease tenure.

According to Ward, ASL will continue looking for suitable expansion opportunities in appropriate locations and with the right timing and funding structures.

With regards to liquidity, the group operated free of debt and had cash and cash equivalents of US$10.87m as at December 31 2023.

“The group is currently in discussions with leading financial institutions to secure funding to complement its healthy cash balances for deployment in carrying out accelerated material hotel refurbishment projects,” he said.