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Business Reporter
Hospitality group Rainbow Tourism Group (RTG) recorded flat revenue performance in the 2015 full year results in comparison to 2014, closing the year on $30,6 million. Despite the flat performance RTG registered growth in occupancy and foreign business. Occupancy grew by 4 percent to 50 percent from 48 percent, while foreign business revenues grew to $9,28 million from $8,75 million recorded in the corresponding period prior year. The positive performance was attributed to the continued strategic investment in the major foreign source markets which include the United States of America, United Kingdom, Europe, China and Australia.
However, revenue growth was impacted negatively by the VAT on foreign revenues which was introduced in January 2015. Adjusted for VAT of $600 000 on foreign revenues, the growth would have been 12 percent on a like for like basis. This is positive for the business as it cushions the company’s performance from the depressed local market.
The Ebola Virus scare, South Africa VISA requirements, coupled with the declining Rand continued to impact negatively on Southern Africa tourist arrivals with South Africa having recorded a 7,5 percent decline in international arrivals by the end of October 2015.
According to Statistics South Africa, Zimbabwe is an extension destination of South Africa and hence is affected to a great extent by events occurring in that country.
Zimbabwe operations occupancies remained flat at 54 percent due to the weak aggregate demand as a result of persistent liquidity challenges, business viability constraints and diminishing incomes.
EBITDA grew by 300 percent from $0,9 million in 2014 to $3,6 million in 2015. The Group posted an operating profit of $1 million in comparison to a loss of $800 000 in 2014. This performance is attributable to comprehensive and stern cost reduction measures which commenced in 2013 as part of the Group’s turnaround strategy.
The Group injected $5,5 million towards CAPEX for product upgrades and refurbishment in the past three years. This was achieved through internal cash flows. In line with the drive to improve the overall customer experience, refurbishment of the Kadoma Hotel and Conference Centre will focus on soft room furnishings, while Victoria Falls Rainbow Hotel will replace the bathrooms and furniture to refresh the product.
Cost management will remain key to the delivery of value, through the removal of inefficiencies from the system. In the face of a worsening liquidity situation the company’s costs remain the more controllable element in the bid to grow EBITDA.
The Group restructured the $13 640 349 loan facilities with NSSA. The new facility has a seven year tenor at an interest rate of 6 percent per annum.
The company remains optimistic about the future in the face of a restructured balance sheet, a fitter business operating model and growing foreign market.
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