HOSPITALITY group African Sun Limited (ASL) is targeting an 18% profit before tax margin as it moves to streamline operations, reinvest in core assets, and cushion the business from mounting tax obligations.
The new target comes as ASL embarks on strategic portfolio realignment, selling non-core properties to focus on high-performing hotels in prime locations.
The group has already disposed of the Great Zimbabwe Hotel in Masvingo for US$4,2 million and is finalising plans to offload Caribbea Bay Resort in Kariba and the Monomotapa Hotel in Harare, the latter of which is valued at US$15 million.
These disposals are part of a deliberate strategy to consolidate and enhance the group’s asset base by focusing on fewer but more profitable properties.
In its annual report for the year ended December 31, 2024, ASL reported a profit before tax margin of 7,5%, having generated revenue of US$53,97 million and a pre-tax profit of US$4,07 million.
The company now aims to more than double that margin, essentially seeking to earn 18 US cents in pre-tax profit for every dollar of revenue.
“The company aims to improve its offering through refurbishment, expansion of existing operations and increasing value added activities before refocusing on growth and expansion,” the report states.
“Thus far, the company has endeavoured in the refurbishment of Troutbeck Resort and Hwange Safari Lodge.
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“The company is committed to consistently growing annual revenue, achieving a profit before tax margin of 18% and 90% customer satisfaction index, through its unique proposition of prime hospitality assets, coupled by providing outstanding hospitality experiences.”
Following the planned asset sales, ASL’s owned hotel portfolio will include Elephant Hills Resort and Conference Centre in Victoria Falls, Hwange Safari Lodge, Holiday Inn Mutare, and Troutbeck Resort.
Its leased properties will cover the Victoria Falls Hotel, Holiday Inn Harare, and Holiday Inn Bulawayo.
Chief executive officer Laurie Ward said the group’s vision was centred on optimising the hotel portfolio by focusing on fewer, higher-yield assets that deliver consistent quality and memorable guest experiences.
“The group’s strategy is centred on optimising our portfolio by focusing on a smaller, more profitable selection of hotels, that prioritise quality and guest experiences,” Ward said.
“This vision will continue to gain momentum in 2025. Our approach involves divesting of non-core assets and concentrating resources on high-performing properties in prime locations.
“By streamlining operations and enhancing service standards, the company aims to deliver consistent experiences that align with evolving guest expectations.
“Additionally, our strategy allows for greater investment in innovative technologies, sustainability initiatives, and most importantly, improved profitability through cost efficiency measures and group procurement initiatives,” he added.
Ward said by streamlining operations, the company expected to improve service delivery, boost financial performance, and reinforce ASL’s reputation as a market leader in the hospitality sector.
The drive toward improved profitability comes as the company grapples with a sharp increase in tax expenses.
During the review period, ASL recorded a tax charge of US$4,76 million, more than double the US$1,94 million posted the previous year, largely due to a prior year assessment of US$2,57 million from the Zimbabwe Revenue Authority relating to the 2019 financial year.
The hefty tax bill pushed the group into a net loss position of US$689 162, despite a relatively stable operational performance.
Management believes that raising the profit before tax margin will help absorb tax shocks and steer the company back to net profitability.
The proposed 10,5 percentage point uplift in the profit before tax margin is expected to enhance post-tax earnings and financial resilience.
Despite the setback, ASL maintains that it remains financially sound and confident in its recovery strategy.
As of year-end, the group reported a cash balance of US$9,77 million, which provides a healthy liquidity buffer to support current operations and planned growth initiatives.
