LEADING hotel and leisure group Zimsun Ltd says Zimbabwe’s poor international image continues to be a challenge and is seriously affecting business in the tourism sector.
The sentiments come at a time when the Zimbabwe Tourism Authority (ZTA) has been high-profiling the country’s allegedly impressive tourist figures, saying Zimbabwe was headed for a tourism boom.
Judging from Zimsun’s comments in its annual results for the audited period ended March 31, the situation on the ground as regards tourists and cashflow, is very different from official guestimates.
Turnover at Zimsun grew by 434% to $43,218 billion while occupancies weakened by 3% to 42% compared to the prior year.
Foreign arrivals contributed 25% of room nights, a marginal decline compared to 27% last year.
Zimsun chief executive officer Shingi Munyeza said however these arrivals only contributed 39% to overall revenues, receding from 56% in the prior year, a direct result of the unfavourable exchange rate that prevailed in the second half.
Munyeza is also Zimbabwe Council for Tourism (ZCT) president.
Zimsun foreign revenues grew by 286% over the period, falling far short of year-on-year inflation levels.
Overall Zimsun posted a profit of $3,402 billion, a virtual standstill position compared to the prior year.
“Such profit was attained primarily in the first half of the year, as in prior years and as is normal for the Zimbabwean tourism industry, patronage is relatively lethargic in the second half of the year,” Munyeza told shareholders this week.
“The poor international image continues to be a challenge. Remarkable strides have been taken to return the economy to some semblance of normalcy and a renewed commitment on the part of the authorities to contain inflation is evident,” Munyeza said. “One can only hope that such commitment will be taken the full mile, otherwise the gains made so far will be reversed momentarily. Unless inflation is contained, exchange rate stability will remain elusive. Foreign arrivals which in the past contributed significantly to group profits may become even less profitable.”
Munyeza said he hoped the hosting of the soccer World Cup in 2010 by South Africa would further bring a positive awareness to the sub-region with immediate effect.
Zimsun, through its wholly-owned subsidiary, African Sun Ltd, recently acquired the lease and operating business of The Grace in Rosebank, Johannesburg.
The hotel is a five-star, 75-roomed property.
The acquisition was by way of an offshore funding structure and took effect on April 1.
Munyeza said the acquisition would help move the group into the South African market.
“This will go a long way in diluting negative perceptions on the region,” he said on Wednesday.
Munyeza said patronage from traditional source markets had remained depressed.
“Global travel has contracted, reportedly by 6%, following the Severe Acute Respiratory Syndrome (Sars) outbreak earlier in the year and threats of further attacks, compounded by a general loss of confidence in the aftermath of the Iraq war,” he said.
Munyeza said the general loss of confidence precipitated by the financial crisis in the last quarter had not spared the industry.
“By the end of the year, domestic tourism, which over the years had grown in significance, had shrunk by 21% compared to prior year,” he said.
“Limited air access to the Victoria Falls and the fuel shortages experienced during the period, also contributed to the decline in domestic patronage. Collectively, hyperinflation pressures, the financial crisis and the implementation of the new monetary policies further toughened the operating environment in the last quarter.”
Munyeza said in addition, as the exchange rate struggled to keep pace with inflation during the second half of the year, export performance was further eroded.
“A weakening of the local currency experienced after April, together with export incentives introduced in May, are a welcome dose of relief to the industry, although more is needed,” he said.