HomeBusiness DigestAfrican Sun weathers economic storm

African countries want investment now

ECONOMIC analysts have wondered how Zimbabwean hotels — a mirror of any country’s economic performance — managed to survive in the past two years, often managing to retain and even grow real earnings when all the economic fundamentals pointed otherwise.

The negative perception of the country together with the cholera outbreak in 2008 weighed heavily on the hospitality sector resulting in room occupancy falling.
African Sun Ltd recorded revenue of US$35,2 million against high operating costs which were 82% of the revenue during the financial year ending September 30 2009.
The group’s occupancy levels fell to 31% from 41% during the same period in 2008. The group ended the year with a balance sheet of US$46,7 million.
High staff costs of US$11,3 million resulted in the group making a loss before tax of US$5,3 million.
During the period, the group’s total borrowings stood at US$7,1 million against total equity and liabilities of US$46,6 million.
With the global environment becoming increasingly untenable last year, it was not surprising that African Sun recorded its worst occupancy rate in a decade, which was attributed to the liquidity crunch that hit major world economies and the local market.
At 31%, the occupancy rate was 10% points lower than the previous year, an indication of the low occupancy levels in Zimbabwe.
Zimbabwe operations constitute 64% of the group’s rooms’ capacity.
Shingi Munyeza, the group’s chief executive officer, said city hotels “were almost back to the 1999 era where they contributed a huge chunk to the group’s revenue”.
Yields however are currently said to be low due to the liquidity crunch and the perception which makes the product trade at a discount compared to regional prices.
“At the moment we are trading at between 20-35% against our counterparts in the region,” Munyeza said.
In 2009, city hotels in Zimbabwe contributed US$13,5 million revenue to the total company revenue of US$24,698 million.
The remainder was contributed by resorts. At least 60% of rooms are in resort areas.
The hotel group’s room capacity registered a 6% increase over the past month with the opening of a new facility in Zambia.
Munyeza said African Sun was now sitting on 3 100 rooms, up from 2 900, as of December last year.
“The opening of the Royal Chundu Zambezi River Lodge in Livingstone, Zambia, in December, added another 200 rooms to our total number of rooms,” he said.
African Sun has set a target of 8 500 rooms by 2012 to be achieved through acquisitions and management contracts.
The hospitality group plans to add almost 180 rooms from some projects that are nearing completion.
Of these, 157 rooms will come from Holiday Inn Gaborone, Botswana, and the balance of 30 rooms from Mulberry Osborne Estate in Lagos, Nigeria.
African Sun has suspended its operations in Equatorial Guinea due to political concerns which included a failed coup d’etat in that country.
African Sun runs about 21 hotels and resorts in Zimbabwe and in several southern and West African countries.
In Zimbabwe it operates the Caribbea Bay Hotel in Kariba, Crowne Plaza Monomotapa in Harare, Elephant Hills Resort, The Kingdom Hotel and the Victoria Falls Hotel.
It also operates the Express Holiday Inn in Beitbridge, the Great Zimbabwe Hotel in Masvingo, the Holiday Inn Bulawayo, Holiday Inn Harare, Holiday Inn Mutare, Hwange Safari Lodge, Troutbeck Resort in Nyanga and Fothergill Island Safari in the Zambezi Valley.

 

Paul Nyakazeya

Recent Posts

Stories you will enjoy

Recommended reading