LEISURE group, Zimsun’s flagship, the Elephant Hills Intercontinental Hotel has posted a $1,3 billion operating loss in its first year of operation after having been gutted by fire in 2001. <
The company has attributed the loss to expenses incurred in relaunching the hotel, repairs and maintenance costs.
Zimsun chairman, Eben Makonese, in his annual report for the year ended December 31, said lower occupancy levels had significant impact on hotel operations leading to business margins declining by 3%.
“The loss was mainly due to lower than expected occupancies, re-launch costs, and repairs and maintenance costs incurred in refurbishing the wing that was damaged by fire,” Makonese said.
He said the decline in the number of international airlines flying to the Victoria Falls and fuel shortages had also contributed to the decline in tourist arrivals affecting the company’s operations.
Makonese expressed concern over the country’s hyperinflationary environment and implementation of the new monetary policy statement, saying it further strained the company’s operating platform.
Makonese said inflation continued to erode the significance of the current exchange rate, affecting the export market.
“The exchange rate struggles to keep pace with inflation during the later half of the year, export performance was further eroded,” Makonese said.
He said the continued strength of the South African rand could be responsible for the slump in tourist arrivals in southern Africa.
Makonese said the strength of the rand had made regional packages provided by tourist companies costly.
“The continued strength of the rand, which has made regional packages more costly, continues to be a setback to inbound travel to southern Africa,” Makonese said.
He said the expansion of the European Union had not spared Zimsun as this was impacting negatively on arrivals from Europe.
Zimsun’s turnover for the period grew by 434% to $43,2 billion.