RTG eyes growth

The hospitality group has lined up a series of measures aimed at enhancing occupancy, average daily rate, revenue per available room and current ratio.
To increase revenue, RTG has targeted volumes growth instead of rates hike as increasing rates — 2,7 percent internationally, in a US dollar economy — is not feasible.

The strategies are the brainchild of new chief executive Mr Tendai Madzivanyika appointed after the departure of Mrs Chipo Mtasa last year.
RTG is targeting 50 percent occupancy this year and the rate is projected to reach 55 percent and 60 percent in 2014 and 2015, respectively.

ADR is seen at US$87 this year, US$95 in 2014, US$110 in 2015 while revenue per available room is projected to top US$44 this year, US$52 in 2014 and US$66 in 2015, as the hospitality group becomes bullish about the future.

On the same note, the country’s biggest hospitality concern, operating Rainbow Towers, Rainbow Victoria Falls, Rainbow Bulawayo, New Ambassador, Kadoma Hotel and Conference Centre and A’Zambezi River Lodge is angling for a current ratio of two by 2015 from 1,5 targeted this year.

The phased recovery programme would include stabilisation in 2013, consolidation and strengthening in 2014 and expansion in the third year from now.
The group is convinced measures the management has put in place would also enable the group to reduce its gearing from 67 percent to 35 percent by 2015.

Communications manager Mrs Elta Nengomasha said all the measures to drive the revenue, profit and volumes growth were already being implemented.
“The measures are already in implementation and the signs have been positive as reflected in the numbers coming through in the first quarter,” she said.

Measures that management has employed to achieve the set targets include centralisation of sales, introduction of proprietary loyalty and promotional programmes, central reservations office reconfiguration, promotion of e-commerce and jolting inflows from the reopened South Africa sales office.

Centralisation of sales is projected to contribute 62 percent of revenue at US$22 million, promotional programmes 14 percent at US$4,8 million, central reservations 15 percent at US$5,1 million, e-commerce 3 percent at US$1 million and  South Africa bringing in 6 percent at US$2,1 million.

Broadly, deliverables expected to lift the Zimbabwe Stock Exchange into sustained profitability include revenue generation, enhanced efficiency, tighter cashflow management, enhanced service delivery and refreshed products.

With targeted revenue of US$35 million in 2013 RTG has geared to reclaim its market share of at least 25 percent next year from 20 percent at the moment. The foreign business is predicted to bring in US$9,4 million — a 58 percent rise.

RTG contends that centralisation of procurement for strategic synergies with suppliers would save it US$750 00, utilities (water and power) US$418 000, fibre optic US$165 000 and staff costs 28 percent of revenue. Average costs have already been reduced by 50 percent from 23 percent to 11 percent.

More savings are expected following a reduction in staff numbers by 170. 
A US$10-million loan secured locally on favourable terms fully restructured short-term debt while US$4,5 million rights issue funds were used for working capital and retiring  short-term debt that was saddling RTG.

Central procurement is also expected to ease pressure on cashflows. Cash credit ratio is seen improving to 70:30 by December 2013 from 54:46 in 2012.
Enhanced service delivery is targeted at enhanced connectivity, differentiated turndown, Rainbow drinks, differentiated guest welcome, signature Rainbow fragrance, smart check in and pillow menu for convenience.

“A refreshed product would be achieved through refurbishment of hotels, A’Zambezi already done, while the process is underway across the group’s hotel chain, including the hospitality group’s operations in Zambia and Mozambique.”

The group is coming from a difficult financial period in 2012 when revenue surged by only one percent to US$28 million, leading a loss before-tax of US$4,576 million.