HomeBusiness DigestRTG reviews management contracts

RTG reviews management contracts

Roadwin Chirara

MASSIVE exchange rate losses have forced listed hotel group, the Rainbow Tourism Group (RTG), to review its long-term management contracts.

, Helvetica, sans-serif”>The company is contracted to two leading international leisure brands — Starwood Hotels and Resorts Worldwide for the Harare Sheraton Hotel and Accor Afrique for its Rainbow Mercure division.

The decision to review the contractual arrangements has been necessitated by the continued increase in foreign currency liabilities which it cannot settle because of foreign currency shortages.

The group has also been badly hit by the downturn in tourism traffic since government embarked on the controversial land reform programme more than five years ago.

The RTG has already reviewed its contract with the Accor group in line with the current operating environment in the tourism sector.

RTG group chief executive officer, Chipo Mtasa, confirmed that the group had renegotiated its contract with its French technical partner, Accor.

The new contract will see the group, chaired by newspaper publisher Ibbo Mandaza, paying fees for the hotels operating under its banner while excluding those not covered by its international brand.

Mtasa said the renewed deal has also seen the introduction of a revised fee structure for the use of the French technical partner.

“We have agreed with Accor on an adjusted fee structure that will see a reduction in the management fees due to them,” said Mtasa.

She said the company was likely to also renegotiate its contract with the Starwood Hotel group regarding its Sheraton contractual obligations. The current contract expires at the end of the year.

“The review of the Sheraton contract is subject to the board deciding on the future of the current arrangement,” said Mtasa.

She said the company believed its continued association with international technical partners would bear fruit and contribute to the company’s earnings.

“We believe they play a significant role in the company’s operations because of their recognised brands that should work in our favour in the long-term,” said Mtasa.

She said the company was revising its position on two of its lodges — Konondo and Kastana — in the Gwaai Conservancy which had been disrupted by illegal settlers during the past five years.

She said the company would resume marketing the lodges as part of its operations.

Mtasa said RTG had also resolved its dispute with regard to Sukumi Tree Lodge, which had also been affected by the land redistribution exercise in the Hwange area.

“We have resolved most of the issues that affected the earnings of Touch the Wild and this is likely to increase the earnings of the division in the current financial year,”said Mtasa.

She said the renovation of Bulawayo Rainbow Hotel was going ahead as planned with the group having made a provision of $6 billion for the facelift.

“We have managed to contain the costs of the renovation exercise mainly because of the pre-buying of building materials,” said Mtasa.

The Rainbow group incurred a trading loss of $279 million for the year to December 31 2004.

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