Hotelier, African Sun, says it expects a significant improvement in the business and economic climate during the second half of the year, although economies are still grappling to deal with the coronavirus (Covid-19) pandemic.
Travel and tourism – both locally and globally – are arguably the hardest hit sectors by lockdowns imposed as a result of the global health pandemic.
The International Air Transport Association (IATA), the UN World Tourism Organisation (UNWTO), the World Travel & Tourism Council (WTTC), the African Airlines Association (AFRAA) and the Airlines Association of Southern Africa (AASA) recently made a co-ordinated appeal to international financial institutions, country development partners and international donors to support the African travel and tourism industries.
Notwithstanding the growing uncertainty, African Sun is looking forward to brighter days.
“Our (Zimbabwe’s) current statistics have shown that we have had 14 512 room nights cancelled, with a total revenue amount of US$4 219 491 by March 24, 2020. As the outbreak continues to evolve, it is challenging at this point, to predict the full extent and duration of its business and economic impact.
“However, we expect the remainder of the first half of 2020 to be severely impacted causing a permanent dent to the 2020 financial performance. The second half is forecasted to have better performance as the pandemic is expected to be under control on the back of lockdowns and isolation measures,” said the group’s chairman Mr Alex Makamure.
“Despite the potential impact of the Covid-19, we expect the general travel outlook in the second half of the year to be somewhat positive and it should dilute the losses of the first half.
“We will continue to target our sales and marketing initiatives in the second half to support and promote international and regional tourism as we anticipate the domestic market to remain subdued.”
Having posted revenue improvement in 2019, African Sun has announced the completion of initiatives aimed at further boosting the topline.
“With regards to revenue earning capacity and net-unit growth goals, the Group has completed two campsites at Great Zimbabwe, and Caribbea Bay Hotel with a combined capacity of 75 rooms accommodating a maximum of 150 people,” said the chairman.
“The group also launched Sun Leisure Tours (a touring division) in the first quarter of 2020, with the initial investment directed to Victoria Falls and Bulawayo. The company is working on resourcing Harare.”
The group’s inflation adjusted revenue for the year ended December 31, 2019 stood at $914 million; a 68 percent growth from prior year largely driven by the average daily rate (ADR).
ADR grew by 102 percent from $869 recorded last year to $1 759 as the hotels continued to align room rates with interbank exchange rate during the year.
Occupancy for the year closed at 48 percent, compared to 59 percent recorded in 2018.
African Sun posted inflation adjusted EBITDA of $387, 94 million, which was 187 percent above last year mainly in response to inflation pressure.
Net financing costs for the year amounted to $8,8 million, an 83 percent increase from $4,8 million reported last year, “attributable to lease liabilities as finance costs on borrowings decreased by 93 percent.”
Inflation adjusted profit before income tax for the year amounted to $338,01 million; a 302 percent growth from $83,89 million reported in the prior year.
And profit for the year stood at $187,04 million, a growth of 227 percent from 2018’s profit of $57,21 million.
The company’s board, however, decided against declaring a dividend from the 2019 profits on the basis of a “need to preserve cash.”