Covid-19 hits ASL

TINASHE MAKICHI

 Hospitality group, African Sun Limited’s (ASL) revenues plunged 41% in the five months to May 2021 to ZWL$739m compared to the same period in 2019 due to the adverse impact of Covid-19 pandemic.

Domestic income accounted for 95% of the total revenue while 5% was generated from foreign tourists, meaning the company is now heavily reliant on the domestic market.

ASL took a deliberate move to compare this year’s trading results with those achieved in 2019 instead of 2020, because the group hardly traded last year due to the Covid-19 induced lockdowns.

Occupancy also plunged 21 percentage points in the reviewed period to close at 22% from 43% in 2019.

“Depressed economic environment which is characterised by a slowdown in economic activity, hyper-inflation, shortages of foreign currency and fuel also contributed to reduced volumes for the domestic market by 29% year to date compared to F19 in the same period,” African Sun chief executive Edwin Shangwa said in a trading update.

Overheads to turnover ratio for the five months period was 100% compared to 51% recorded in the same period F19 due to the impact of suppressed revenues while a significant portion of its costs is fixed.

EBITDA margin was -3% compared to 38% recorded in the same period in F19.

Looking into the future, Shangwa said the Covid-19 pandemic has brought about uncertainties which make it difficult to forecast future performance even in the short to medium term.

The group, he said anticipates continued disruption to travel and tourism in the months ahead due to the Covid-19 pandemic, as the future is very uncertain.

He, however, said this year’s performance will be anchored on domestic business with government, NGO and corporate business being the main drivers.

“It is encouraging that we have noted an improvement in domestic leisure travel post lockdown,” Shangwa said.

He said the growth trajectory and volumes rebuilding phase was likely to be flatter due to lockdowns, and low disposable incomes.

Shangwa added that the ban on workshops and meetings as per Statutory Instrument (SI) 170 will have a negative impact on convention business and this will affect mainly City and Country hotels.

Increased activity from NGOs that are involved in developmental, humanitarian, political advocacy and disease control is expected to continue.  Introduction of SI 127 has resulted in a hike in foreign currency prices and may increase the cost of doing business.

He also said the rehabilitation of the Robert Gabriel Mugabe International Airport is expected to position Harare as a major hub for regional and international flights.

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