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Nelson Gahadza-Business Reporter
Hotelier, Africa Sun says revenue for the year to December 31, 2023, grew by 30 percent to US$54,73 million from US$42,14 million in 2022, largely driven by firmer average daily rates (ADR).
The ADR, according to chairman Mr Constantine Chikosi, closed 2023 at US$110, an increase of 39 percent from US$79 achieved during the comparable period in 2022 as a result of changes in customer mix.
“Hotel occupancies increased to 52 percent, being 6 percentage points above 2022, while revenue per available room (RevPAR) for accommodation revenue increased by 58 percent to US$57, up from US$36 in the comparative period,” he said.
During the year under review, the group posted an operating profit of US$3,74 million. Mr Chikosi said profit after tax from continuing operations of US$0,52 million was, however, marginal.
“This was largely as a result of a harsh macroeconomic operating environment, characterised by costs escalating at a higher rate than revenues, compounded by material exchange rate losses,” he said.
In the period under review, the chairman said operating expenses excluding depreciation increased by 43 percent to US$27,63 million compared to US$19,29 million in 2022, driven largely by the exchange rate, inflationary pressures, and the crystallisation of expenses in US dollars, as the economy continued to dollarise at a rapid pace.
He said the group would continue to monitor costs and implement various cost-saving initiatives.
The group’s earnings before interest, tax, depreciation, and amortisation (EBITDA) were US$9,45 million, down from US$17,86 million in 2022, and the loss for the period was US$0,36 million.
Mr Chikosi said two of the group’s hotels under external leases had their base rentals changed from Zimbabwe dollar to US dollar, and this had the downstream effect of significantly increasing the lease liability interest and right-of-use asset depreciation compared to 2022.
“The discontinued operations loss of US$0,89 million largely comprises property and equipment impairments post the closure of The Kingdom at Victoria Falls Hotel and the Makasa Sun Casino.
“This follows the mutual termination of the lease at The Kingdom at Victoria Falls Hotel due to an untenable lease tenure.
“The group will continue looking for suitable expansion opportunities in appropriate locations and with the right timing and funding structures,” said Mr Chikosi.
With regards to liquidity, he said the group operated free of debt and had cash and cash equivalents of US$10,87 million as of December 31, 2023.
Mr Chikosi said the group is currently in discussions with leading financial institutions to secure funding to complement its healthy cash balances for deployment in carrying out accelerated material hotel refurbishment projects.
In terms of portfolio transformation and hotel refurbishments, Mr Chikosi said the cash deployment strategy mainly focuses on completing targeted hotel refurbishments to enhance the guest experience.
“During the period under review, we continued to prioritise strategic capital allocation initiatives. This included the completion of the refurbishment of the remaining 46 rooms at Hwange Safari Lodge and the refurbishment of the public areas, which is progressing well.
“The refurbishment of the public areas at Troutbeck and the Great Zimbabwe conference centre was also completed during the period under review,” he said.
On the domestic front, the group anticipates yield on the growing demand for Meetings, Incentives, Conferencing, and Events (MICE) business as well as benefits from several high-profile events, including the Zimbabwe International Trade Fair (ZITF) and the Victoria Falls Carnival.
Looking at the year ahead, Mr Chikosi said the UNWTO forecasts international tourist arrivals to fully recover to pre-pandemic levels in 2024, with initial estimates pointing to a 2 percent growth above the 2019 levels, underpinned by increased air connectivity and the continued recovery of Asian markets and destinations.
The group currently has three divisions which are: City and Country Hotels, Resort Hotels and The Victoria Falls Hotel Partnership. The Company’s hotels are located in all the tourist resorts in Zimbabwe, as well as in four out of the five cities in the country.
The company also operates timeshare units throughout Zimbabwe.
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