Rainbow Tourism Group (RTG) reported a 61% plunge in its profit to ZWL$352.1m in the 12 months to December 31, 2021 from ZWL$914m reported in prior year as the tourism sector was significantly impacted by the effects of Covid-19 pandemic.
Revenue for the group was down 66% to ZWL$1.1bn in the reviewed period from ZWL$3.2bn in 2019 due to the closure of hotels in Victoria Falls to combat the spread of the pandemic.
RTG operates the Rainbow Towers, the New Ambassador Hotel, the Bulawayo Rainbow Hotel, Kadoma Hotel & Conference Centre and A’Zambezi River Lodge.
RTG chairman Arthur Manase said the Covid-19 disruptions led to closure of the Victoria Falls market as well as reduced numbers into city hotels.
“Although the restrictions were gradually lifted in South Africa as well as in Zimbabwe during the year, the fear and uncertainty surrounding the pandemic created great caution among travellers resulting in reduced business and leisure travel,” Manase said.
Occupancy for the period under review was 26% from 47% recorded in 2019.
Gross margins for the group closed the period under review at 71%, from 73% reported in 2019.
The earnings before interest, tax, depreciation and amortisation (EBITDA) margin, however, was 42%, during the reviewed period from 32% reported in 2019.
Manase said the growth in EBITDA margin was mainly due to various cost reduction initiatives adopted during the year in response to lower business volumes.
Total assets for the group were 8% up to ZWL$3.49bn in 2020 from ZWL$3.24bn.
Manase said the group’s fundamentals remained strong despite the tourism industry facing headwinds arising from the Covid-19 pandemic.
He said RTG’s efficient and lean organisational structure helped the hotelier to adapt to the obtaining environment.
The group’s performance was mainly sustained by its city hotels as the hospitality group enjoyed superior location advantage as 80% of its rooms stock sat on the commercial trunk of the country (the Harare Bulawayo trunk), with optimum dispersion.
The group repaid the debenture of ZW$16.7m in full in the period under review and is now debt-free.
Its gearing stood at 1%.
The group has also embarked on a digitisation drive to cushion itself against Covid-19 positioning Gateway Stream as a driver of revenue and capitalising on the opportunities presented by e-commerce.
“With the advent of the Covid-19 induced lockdowns, the group quickly configured the Gateway Stream mobile and web application in recognition of the significant shift in consumer behavior that moved the market to adopt online commerce. The group’s success thus far is attributed to its ability to adapt to the new normal,” Manase said.
RTG wound up the operations of Journeys by Exotic in the United States of America (USA) following an assessment of its ability to continue to operate as a going concern.
RTG said the increasing uncertainty in the USA market due to heightened cases of Covid-19 necessitated the need to discontinue the operation effective August 31 2020.
The group’s local tour operations arm, Heritage Expeditions Africa (HExA) was severely affected by the effects of the pandemic.
HExA resumed operations in September 2020 following the relaxation of the lockdown restrictions. However, HExA revenues grew in the last quarter of the year to close on ZWL$6.2m, six times more than ZWL$1m recorded in 2019.
The group remains optimistic that increased domestic tourism activity would drive an increase in HExA revenues in 2021.