ZIMBABWE Stock Exchange listed hospitality group African Sun has reported an after tax loss of US$3,3 million for the year ended September from a loss of US$2,2 million posted during the same period last year on weakening revenues.
During the period under review, the group changed its traditional hotel management model to a hotel investment model which resulted in the winding up of operations in Ghana and Nigeria.
Despite lowering costs during the period under review, the company said the discontinuation of loss-making units in Ghana and Nigeria, saw revenues declining to by 8% to US$50,1 million.
Occupancy levels marginally rose to 48% from 47% while revenue per available room (RevPAR) was 4% lower to US$43.
“Following the change of business model, discontinuation of the loss making operations in Ghana and Nigeria as well as the recent retrenchments, the group is poised to move from a loss making to a profit position, chairman Herbert Nkala said in a statement accompanying the financials.
“We expect foreign arrivals, particularly for the Victoria Falls properties to rebound, not only due to the positive change in our business model but also due to the curbing of the Ebola epidemic and the expansion of the Victoria Falls airport. The domestic market is however expected to remain subdued, with low demand and pressure on rates.”
The group said there was no financial impact from its exit of Nigeria as the company was in a net liabilities position.
“The decision to exit Ghana was premised on the sustained losses of the operations. The losses were driven by low revenues and high fixed costs which were pushed by fixed operating lease costs,” the company said.
“Management efforts to engage the landlord to revise the operating lease costs were fruitless resulting in a mutual termination of the lease contract and disposal of the operating assets to the landlord on August 31. Proceeds from the sale of the operating assets were outstanding as at the reporting date.”-Staff Writer