Rainbow Tourism Group (RTG) has posted a profit before tax of $6,7 million in the six months to June 30, a 16-fold jump from $416 000 in the prior comparable period on the back of a 170 percent rise in revenues.
Group revenues rose to $37 million, despite business disruption in the form of the closure of Rainbow Bulawayo for refurbishment during the period under review.
In an interview on the sidelines of the company’s analysts briefing yesterday, chief executive Tendai Madziwanyika, said the RTG Virtual model was beginning to yield positive results for the group.
The RTG Virtual is a partnership platform between RTG and selected hotels, lodges and tourism activity companies in Zimbabwe, which also develop their business capabilities and access to markets.
“Revenue has gone up 170 percent, which is ok, but compared to the number of times growth it’s a modest number.
“Then you look at occupancy, which went down by 18 percent, and that’s simply because of Bulawayo. In Bulawayo we closed the hotel from February 1, 2019 up to April 15, 2019, that’s about two and a half months so that definitely dented our revenue performance
“But what is exciting, of course, is if you consider the period of two and a half months and the effect on the revenue, you will find that when you look at it on the profit side the impact was not significant, in fact our profitability was very good in that period because of the RTG Virtual model,” said Mr Madziwanyika.
“Because what we then did is that inasmuch as the (Bulawayo) hotel itself was closed, we managed to put guests into partner hotels, so the Virtual model is definitely working.”
The hospitality group generated foreign currency revenues to the tune of US$4,8 million, a 9 percent improvement from the US$4,4 million that was achieved in the prior comparable period. Management attributed the improved forex generation to “increased foreign arrivals into resort hotels.”
Arrivals into RTG in particular grew by 14 percent in comparison to national average growth of 1 percent.
Revenue per available room (RevPAR) closed at $120, which was 186 percent above $42 recorded in 2018.
RTG’s occupancy for the period under review declined 10 percent from 53 percent in 2018 to 43 percent.
Management partly attributed the decline to the closure of the Bulawayo hotel, with subdued industry occupancies also contributing.
Gross profit margin closed at 74 percent, which was 10 percent above 67 percent in the prior comparable period as the company maintained a cost-containment strategy.
Mr Madziwanyika said significant benefit was derived from the use of foreign currency generated in the business to achieve procurement efficiencies.
Earnings before interest, tax, depreciation and amortisation (EBITDA) grew 364 percent to $10,2 million from $2,2 million in 2018.
“The growth in EBITDA demonstrates the company’s ability and capacity to navigate the increasingly challenging operating environment,” said management.
Finance costs for the period stood at $1,3 million, up from $574 000, attributable to “finance lease costs” following the adoption of the IFRS accounting policy.
Basic earnings per share grew to $0,22 from 0,009 cents in the prior comparable period.