RTG navigates turbulent waters

BUSINESS REPORTER 

A strong business model  has played a major role in Rainbow Tourism Group, a publicly traded hospitality group’s ability to  navigate turbulent waters ,  Business Times can report.

Consequently, RTG announced a 528% rise in profit to ZWL$39.336bn in the six months to June 30, 2023, from ZWL$6.262bn in the prior comparative period.

In a statement released by RTG chairman Douglas Hoto (pictured) along with the company’s half-year results, this increase was primarily the result of the leisure group’s strong measures, which allowed it to weather several economic headwinds, including foreign currency challenges, liquidity constraints, volatile exchange rate and devastating  power outages, among  many others.

Hoto said the group proactively implemented a number of measures aimed at mitigating the risks arising from the operating environment in response to this constantly changing landscape.

“I am delighted to announce that the group has achieved a profit for the first half of the year to June 30, 2023. This achievement is a testament to our unwavering dedication and the resilience of our business model, which has demonstrated its adaptability in the face of significant challenges posed by the complex economic landscape in Zimbabwe. Despite the formidable hurdles presented by inflation and price disparities, we have successfully navigated this terrain, emerging stronger than ever. Throughout all the challenges of the first half of the year, we have calmly navigated these turbulent waters,” Hoto said.

According to him, the company’s resolve to fortify the brand is unwavering, and the favorable financial result validates RTG’s dedication to a future marked by providing customers with high-quality service and expanding across all performance indicators.

Revenues for the group grew 41% to ZWL$49.6bn from ZWL$35.2bn realised  in the prior comparative period.

“The growth in revenues demonstrates the group’s agility in the face of a difficult operating environment. Gross margins for the review period stood at 65%, slightly lower than the 72% achieved in 2022. This decline in gross profit margins is directly attributable to increased costs as driven by inflation during the reporting period.

“The group’s Earnings Before Interest, Tax, Depreciation, and Amortization (EBITDA) reached ZWL$3.5bn, a 63% decrease when compared to the ZWL$9bn EBITDA reported in 2022. The financial position of the group remains robust, as evidenced by its statement of financial position. The current ratio has improved to 0.88, signifying a positive upturn from the 0.79 recorded as of December 31, 2022. This enhancement can be directly attributed to the judicious implementation of cash flow management strategies,” Hoto said.

The occupancy rate closed at 46%, a slight 4% decline from the 48% attained in 2022, despite registering a strong performance.

The group’s diversification of business lines allowed it to bounce back from that decline in occupancy levels.

“Nevertheless, the group displayed commendable resilience in maintaining business volumes, primarily driven by segments such as accommodation and outside catering. Further bolstering the group’s performance were the tours and activities business; Heritage Expeditions Africa, and the tech business; Gateway Stream,”Hoto said.

Throughout the reporting period, the group committed ZWL$2.6bn, or US$1.7m, to capital expenditures (CAPEX), with the main goal of the investment being the improvement of critical spaces across all hotels.

This included finishing a thorough renovation of all the suites at Rainbow Towers Hotel and Conference Centre, including the esteemed presidential suite. This calculated investment highlights the group’s dedication to enhancing its offerings with the ultimate goal of making the entire visitor experience truly exceptional.

“Such targeted improvements align seamlessly with our long-term growth objectives, as we continue to position ourselves as leaders in the hospitality industry,” Hoto said.

With regard to the Kadoma Hotel and Conference Center, the company was able to reap the rewards of its investment in renewable energy during the period under review.

In addition to reducing its energy bill by 40%, the company produced 100,116 KWH of clean energy, or 32% of its total energy consumption.

RTG announced a dividend in response to its excellent results.