‘Credible polls key to African Sun growth’

HOSPITALITY group African Sun Limited (ASL) is optimistic of a significant long-term expansion initiative which could see it operating five new local hotels once credible general elections are held this year, CEO Shingi Munyeza said.

Taurai Mangudhla

Addressing journalists on the sidelines of the company’s 2013 half-year briefing for the period to March 31, Munyeza said peaceful and credible elections would see the continuation of the current growth trajectory in tourism, with current growth patterns expected to more than double.

“A violent and contested outcome will result in the current growth trends persisting,” he said, adding no cancellations have been made on bookings since proclamation of the elections date as was the case in 2005 and 2008.

Munyeza said of the three planned hotels, one has provisionally been set to be located in Harare, while the other two are set for Bulawayo.

“We have about five sites which we are looking at and we will be making mixed use in terms of amenities. This is the international trend and it’s more viable,” Munyeza added.

He said the hotel group plans to lease space and sink less capital to see the project through.

Currently, ASL leases buildings from its majority owned Dawn Properties.

Munyeza said the upcoming United Nations World Tourism Organisation general assembly presented a unique marketing opportunity for Victoria Falls and the rest of the country with foreign arrivals expected to grow 10% while revenues are expected to rise to 8% by year-end.

Earnings before interest, taxes, and depreciation and amortisation (Ebidta) margins are forecast at 12%.

In a financial review for the period, group FD Nigel Mangwiro said revenue for the period went up 6% compared to the same period last year to US$26,6 million, mainly driven by a 6% growth in average daily room rate.

However, after tax profit slid 13% to US$914 000. Ebidtda went up 65% to US$3,58 million from savings realised from a 5,25% fall in cost of sales and 3,7% decline in operating expenses.

“We generated higher revenue at much less cost mainly emanating from the weakening of the (South African) Rand because most of our imports come from South Africa,” Mangwiro said.

Cash generated from operations stood at US$3,1 million from just US$578 000 in the previous comparative period.

The company’s debt, currently at US$19 million, is expected to be reduced to US$10 million or less using either balance sheet restructuring or cash payments.

New terms with cheaper interest rates are expected to be negotiated for the debt going forward, company management said.