RAINBOW Tourism Group (RTG) will exit the Mozambique market at the end of this month due to declining revenue inflows, the hoteling group said.
By Kudzai Kuwaza
The group’s exit from Mozambique comes shortly after RTG exited the Beitbridge market owing to perennial losses. The group incured a loss of US$2,9 million for the half year compared to the US$1,9 million loss recorded the previous year. About US$1,6 million was from discontinued operations.
RTG chief executive Tendai Madziwanyika said the losses at Rainbow Hotel Mozambique stemmed from political instability, cutbacks in government spending and the resultant exchange rate losses.
“We made the decision to pull out of the market after realising that a realistic chance for a rebound is not likely.
It might be a long haul,” Madziwanyika said. “Ourstrategy now is to consolidate our position in the motherland and become strong locally first as well as support the local tourism industry.”
In the 18-month period to June 2016, the Mozambican Metical depreciated against the greenback from 1:34 to 1:80 which cost RTG US$480 000 in exchange rate losses.
Madziwanyika said his company is leaving the business after six years of operations and having refurbished part of the hotel. The lease, the RTG boss said, was for a period of 10 years.
The hotel group’s revenue grew by 4% to US$11,8 million during the period under review with the resort hotels occupancy growing from 46% to 56% during the same period. The group also posted an operating profit of US$50 000.
It is the first time since 2012 that the group has posted an operating profit. RTG’s foreign business transaction contribution grew by 32%.
The group spent just over US$500 000 on refurbishments for the various hotel properties during the period.
Madziwanyika said the group plans to have serviced most of its loans by the end of June next year and remain with just the US$13,6 million National Social Security Authority loan and US$1 million short-term loan to help with the short-term gap.
Madziwanyika said the group will engage the Reserve Bank of Zimbabwe over the speedy liquidation of Capital Bank to help unlock RTG’s capital of US$1,9 million which is stuck in the bank. The amount is a loan from Afriexim Bank.
“Our money is still stuck and we wish that the Reserve Bank will really take action there because we have US$1,9 capital still stuck in Capital Bank,” Madziwanyika said. “Our balance is US$1, 3 million which means we are now paying back money that we did not use which is really sad.”