Weakening rand costs RTG

Roberta Katunga Senior Business Reporter
LEADING hospitality concern Rainbow Tourism Group has blamed its eight percent decrease in revenue in the first half of the year on subdued foreign business mainly driven from South Africa. According to the hospitality concern, business from the country’s largest source market, South Africa, was affected by the weakening of the Rand rendering Zimbabwe an expensive destination.

Presenting the company’s abridged unaudited financial results for the half-year ended 30 June, RTG board chairman Mr John Chikura said reduction in base business, weak market demand and the implementation of cost cutting measures by major business suppliers had resulted in reduced spending thus affecting the performance of the hotel industry.

“The revenue performance was negatively impacted by low conferencing activity in the first four months of 2015. The decrease in foreign business which is mainly driven from South Africa was due to the weakening of the Rand rendering Zimbabwe an expensive destination,” said Mr Chikura.

According to the results, the group’s revenue per available room (RevPAR) was down by six percent, a development that was according to RTG a result of rate softening and lower occupancies compared to the same period last year.

Earnings before Interest, Taxes, Depreciation, and Amortization (EBITDA) margin was US$0,5 million compared to $1,5 million last year and the group posted a loss of $1,9 million for the half year, down from a profit of $139 000 during the same period last year.
“The drop in EBITDA was due to the drop in revenue of $1 million in the current year,” said Mr Chikura.

However, Mr Chikura said they were confident of a full recovery at the end of the year as the second half of the year contributes 60 percent to the annual revenue.
He said an upsurge in conferencing activities was expected as the country through the Ministry of Health and Child Care is set to host an international conference which will attract 7 000 delegates.

Meetings, Incentives, Conferences and Events (MICE) business has proven to be a lucrative and consistent segment of tourism.
THE Zimbabwe Tourism Authority is on record saying the country’s strength in tourism lies in MICE, leisure and safari.

The tourism industry wants to capitalise on MICE business to grow the sector. Mice tourism rakes in three times more receipts than leisure tourism with knock-on effects on local hotels in terms of revenue generation.

MICE business has huge potential to sustain the country’s economy through revenue generation and employment creation while increasing destination awareness.
According to the United Nations World Tourism Organisation (UNWTO) MICE tourism generates $23 billion regionally each year and is responsible for generating 45,8 percent of revenues in the hospitality industry.

Addressing the issue of hotel upgrades, Mr Chikura said RTG had to date spent $1 million towards facelifting the Rainbow Towers hotel’s conferencing facilities as well as refurbishments of Kadoma hotel and the Victoria Falls Rainbow hotel.