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Oliver Kazunga Senior Business Reporter
HOSPITALITY giant, Rainbow Tourism Group (RTG) has advanced $1.9 million for the refurbishment of its flagship Rainbow Towers Hotel and Conference Centre.
Rainbow Towers Hotel and Conference Centre (RTHC) is one of the country’s prime facilities that has hosted a number of local and international events such as the Sanganai/Hlanganani Tourism Fair.
RTG chairman John Chikura said during the period under review, the group incurred an impairment charge of $2.8 million while earnings before interest tax depreciation and amortisation margin declined to $0.9 million in 2014.
“The once-off impairment charge of $2.8 million was made up of the $1.9 million held up at Capital Bank (now defunct), which was meant for the refurbishment of RTHC.
“The bank is now non-operational after the cancellation of its banking licence by the Reserve Bank of Zimbabwe (RBZ) in June 2014,” he said.
“The group has provided for this amount in full. However, we’re optimistic of the outcome of the impending liquidation process.”
Chikura said the overdue management fees of $0.9 million were owed by Savoy Hotel in Zambia.
He said retrenchment of staff at central office and RTHCC amounted to $0.9 million and has an 11 month payback period.
“The Rainbow Beitbridge Hotel recorded a loss of $0.6 million for the year against initial projections of a $1.0 million loss. This loss was mainly due to start-up costs, which is expected of a hotel in its first year of operation,” said Chikura.
The group’s borrowing position as at December 31, 2014 reduced to $22.2 million (December 2013: $23.9 million) representing a reduction of seven percent.
The effective cost of debt remained at 11 percent since the beginning of the year.
“Included in the borrowing is a $10 million loan from National Social Security Authority, which will be payable by December 31, 2015.
The loan was meant to provide the group with some relief from pressure exerted by short-term borrowing at exorbitant interest rates during the three-year turnaround period starting from January 1, 2013 to December 31, 2015.
The loan will be reviewed during the third quarter of 2015 and restructured accordingly.
The group’s revenue performance increased by five percent to $30.7 million from $29.3 million achieved in the same period in 2013.
The growth in revenues was mainly driven by foreign business.
“Zimbabwe operations revenues excluding the newly opened Rainbow Beitbridge Hotel increased by $0.1 million from $27.7 million to $27.8 million. The Zimbabwe operations revenues were given a boost by innovative programmes such as Stay Now Pay Later and RTG Mobile. These programmes contributed $0.4 million to revenue growth,” he said.
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