HomeBusiness DigestWith a will of steel, Mtasa adamant RTG will not sink

With a will of steel, Mtasa adamant RTG will not sink

Dumisani Ndlela

THERE is no doubt the tourism sector provides the most spectacular frustrations to a chief executive officer running a tourism-based company under Z

imbabwe’s present economic conditions.

But Chipo Mtasa, group chief executive of the Zimbabwe Stock Exchange (ZSE)-listed Rainbow Tourism Group (RTG), has a will of steel.

For a job presenting an adrenaline rush that could easily throw into the lurch even those with the finesse required of any tourism operation, her exploits are quite daring.

RTG, a perennial loss-maker whose woes had been made even more poignant by the loss of international tourist traffic because of the negative perception on the country, has finally turned around the corner to profitability, recording an operating profit of $24 billion for the year to December 2005, from a $455 million loss the previous year.

“It’s not easy,” says Mtasa, who took over as RTG’s CEO from Herbert Nkala towards the end of 2004. “It’s a constant look at our margin,” she says, brooding over the question about the sustainability of profitability in a troubled market environment.

Obviously, she is not the faint-hearted type that easily throws in the towel when confronted with tough decisions.

However, she admits the issue of negative perception affecting Zimbabwe’s tourism sector has to be quickly dealt with.

“Perceptions do worry us,” says Mtasa, matter-of-factly. “Something will have to happen to change (negative) perception on the country.”

Last year, Zimbabwe experienced a 16% decline in tourist arrivals against arrivals recorded the previous year.

In her report accompanying financial statements for the year to December 2005, Mtasa says hotel occupancies remained depressed at 38% compared to 43% the previous year.

The tourism sector, she says, had been hit hard by low domestic demand due to weak macro-economic conditions, negative perceptions about the country in major source markets and limited direct international flights into the country.

A number of airlines have abandoned routes into the country because of the economic crisis, characterised by acute foreign currency and fuel shortages.

But, more significant is the fact that neighbouring Zambia and South Africa have benefited immensely from Zimbabwe’s losses.

Zambia’s tourist arrivals are on an upward spiral, gaining from Zimbabwe’s five-year losses as tourists shun the southern African country troubled by its worst ever economic crisis since Independence in 1980.

South Africa is aggressively taking advantage of the poor fortunes of its northern neighbour by marketing the Victoria Falls resort, attracting visitors who would otherwise have come to Zimbabwe to watch one of the world’s seven wonders.

When visitors to the Victoria Falls come through South Africa, they only fly for a few hours into the country without spending on hotel and other costs in Zimbabwe, depriving the country of much-needed foreign currency receipts.

The number of tourists visiting Zambia has more than quadrupled over the last five years, improving revenues from the sector to well over US$150 million as tourists now prefer to visit Zambia instead of Zimbabwe.

Already, Zambia’s Ministry of Tourism has embarked on a campaign to increase tourist numbers, and is aiming at reaching an annual tourist arrival figure of one million visitors per year.

A total of 610 109 tourists visited Zambia in 2004, with the figure expected to be high for 2005. This compared to about 160 000 tourist arrivals in Zambia before Zimbabwe’s tourism industry began suffering due to the political and economic crisis.

To tap into Zambia’s booming tourism sector, Mtasa says RTG is currently in the process of registering a tour operations office in Zambia’s Livingstone town, which also provides a view of the Falls.

Domestically, RTG has, against the backdrop of an acute economic crisis, inevitably felt the pinch in the tourism sector and embarked on a multi-billion dollar programme upgrading the group’s hotels and lodges, as well as boosting the bus fleet for subsidiary, Tourism Services Zimbabwe, whose head office was relocated from Harare to the resort town to improve operational efficiencies.

There are plans to add more buses to the current fleet run by Tourism Services Zimbabwe.

Mtasa stunned the market this year when she announced that Sheraton Hotel & Towers would be branded Rainbow Towers Hotel.

The obvious fear from a curious market was the marketability of the new brand; Sheraton Hotels had performed favourably well due to the fact that it was an international brand with international linkages that helped attract global traffic, especially through the Starwood privileges associated with Sheraton’s worldwide operations.

Mtasa says she is upbeat about the prospects of the new brand, and that costs of maintaining the Sheraton brand had become a haemorrhage on the group’s bottom line under present economic circumstances because of foreign currency denominated fee payments for the brand.

With the right management team in place, she believes Rainbow Towers Hotel will maintain, or even surpass, current performance.

Although she refuses to discuss the issue at a delicate stage of negotiations, businessdigest has been reliably informed that a restructuring of management has already taken place at Rainbow Towers Hotel, with only the general manager and marketing manager’s positions yet to be filled.

She has reportedly managed to get an international hotelier from outside the country to take up the post of general manager, and the post is expected to have been filled by the time RTG launches the new Rainbow Towers brand around August.

“International clients are still coming,” says Mtasa. “It’s not just loyalty, we’re offering valuable services and it’s a place they can do business while visiting.”

While she admits having lost the Starwood privileges after divesting the Sheraton brand, Mtasa believes they can counter that with improved services and other packages.

“As we go into the future, we’ll look for linkages with international (hotel) chains that can give our clients access to other products,” she says.

“We’re conscious of the need to add international market linkages while maintaining our identity. We’ll not compromise on that; we want to maintain our high profile market clientele.”

She adds: “Our brands should be known and it doesn’t happen overnight. We’ll adopt an aggressive approach in our marketing.”

RTG has refurbished the Bulawayo Rainbow Hotels at a cost of $40 billion, and spent $7 billion on soft furnishings for the Ambassador Hotel in Harare.

Other hotels and lodges under the group are also earmarked for major refurbishments.

The group operates 10 hotels and lodges across the country, with a presence in key resort areas.

“The (upgrading) process is continuing,” says Mtasa. Because of funding constraints, these would be undertaken in a phased process.

But the logic of such investments is lost to investors when this is judged on the basis of dwindling tourist arrivals.

“We cannot hold our hands and give up. We’re taking a futuristic approach,” says Mtasa, cognisant of a host of difficulties militating against the industry.

“When the numbers come back, we want to be competitive and take advantage of the market,” she says.

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