RTG banking on festive season boom to drive growth

Enacy Mapakame

Business Reporter

Hospitality services provider, Rainbow Tourism Group (RTG,) is banking on anticipated festive season boom, which it hopes will reverse the impact of the decline in occupancy experienced during the first half of the year to 2023.

During the half year to June 30, 2023, the group recorded occupancy rate closed at 46 percent, which was a 4 percent decrease from the same period in 2022.

But the second half of the year usually brings good business buoyed by increased travel by holidaymakers during the festive season.

“The group holds an optimistic outlook regarding the resurgence of the industry in the second half of the year. The last half of the year usually contributes around 60 percent of the total business led by conferencing and foreign leisure business,” said group chairman Douglas Hoto in a performance update for the half-year period.

Despite the slowdown in occupancy rate, Mr Hoto said the group showed resilience in maintaining business volumes, primarily driven by segments such as accommodation and outside catering.

“Further bolstering the group’s performance were the tours and activities business; Heritage Expeditions Africa; and the tech business; Gateway Stream,” he said.

During the review period, revenue jumped 41 percent to $49,6 billion, compared to $35,2 billion achieved during the same period in the prior year, which the group said demonstrates its agility in the face of a difficult operating environment.

According to the group’s financials, earnings before interest, tax, depreciation and amortisation went down 63 percent to $3,5 billion. But profit after tax for the period was six times higher than prior comparable period to close the half year at $39 billion.

Gross profit margins for the review period stood at 65 percent, slightly lower than the 72 percent achieved in 2022.

“This decline in gross profit margins is directly attributable to increased costs as driven by inflation during the reporting period,” said Mr Hoto.

He added the financial position of the group remained robust, and the current ratio has improved to 0,88, signifying a positive upturn from the 0,79 recorded as of December 31, 2022.

During the half-year period, RTG allocated $2,6 billion towards capital expenditure with the primary focus of the capex investment directed towards the enhancement of essential areas within all group hotels.

“Notably, this encompassed the completion of a comprehensive upgrade of the suites at Rainbow Towers Hotel and Conference Centre, including the prestigious presidential suite.

“This strategic investment underscores the group’s commitment to improving its facilities and services, with the overarching goal of elevating the overall guest experience to world-class status,” he said.

Going forward, the group’s focus will be on maintaining and enhancing profit margins through diligent cost management and the adoption of innovative business models.

“We remain dedicated to leveraging synergies with our valued business partners and nurturing a motivated workforce to establish enduring value for our shareholders,” said Mr Hoto.

The group declared an interim dividend amount of US$260,000 (or US$0,000104 per share) and $1,613,820,480 (or $0,65 per share) respectively.