Zimbabwe Stock Exchange-listed hospitality group, African Sun, said it has retrenched nearly 250 employees as a survival strategy in the face of dwindling tourists’ arrivals and the harsh economic environment.
The group’s managing director, Edwin Shangwa, said the staff rationalisation exercise will result in improved efficiency.
“In 2015, our corporate oversight structure was streamlined for cost and operational efficiency resulting in a headcount reduction from 42 to 14 purpose-fit and focussed professionals,” he said in the hotelier’s annual report published recently.
“Our hotels shed 219 employees by way of retrenchment to ensure employment cost shifts closer to a semi-variable as opposed to fixed cost model as our business is highly seasonal and cyclical,” he added.
Shangwa noted that the gains of the headcount restructuring process are expected to manifest, embed and deliver financial value in 2016 and operational efficiencies. “Cost reduction initiatives which are already underway will certainly drive performance,” he said.
The latest development comes after African Sun, which was spun off from Delta Corporation in 2003 to unlock shareholder value, went through a transition from a hotel operating company to a hotel investment management company with effect from October last year.
The change in business model resulted in the strategic business units being classified as hotels under management, franchised hotels, owner managed hotels and the Victoria Falls hotel partnership. Shangwa said this also resulted in the appointment of the Legacy Group of Hotels to manage five hotels.
“Legacy Hotels and Resorts owns and manages a collection of four and five-star hotels, bush lodges, leisure resorts and casino resorts in key tourism and business locations throughout Africa and is expanding into the emerging European and Middle Eastern markets.
“This new model also saw an enhanced and improved relationship with Intercontinental Hotels Group,” he added.
African Sun, which recently exited some of its loss-making operations in Ghana and Beitbridge, recorded an $8,31 million loss in the 15 months to December 2015 compared to a loss of $2,29 million posted in the previous corresponding period.
In the period under review, the group’s revenue decreased by eight percent to $63,15 million due to a noticeable decline in the average monthly revenues during the period under review.
The drop in average monthly revenue was mainly as a result of a five percent reduction in the average daily rate from $98 achieved last year to $93.
The listed hotel group said the average daily rate drop was partially attributable to the introduction of 15 percent value added tax on foreign revenue.
“Occupancy marginally increased to 49 percent from 48 percent. The effect of the drop in the average daily rate and the marginal increase in occupancy was a four percent drop in revenue per available room from $47 to $45,” the hotelier said.
African Sun hotels include Holiday Inn in Harare and Bulawayo, Elephant Hills (Victoria Falls), Troutbeck Inn (Nyanga), Caribbea Bay (Kariba), Beitbridge Express, Monomotapa Hotel (Harare), Great Zimbabwe (Masvingo), Victoria Falls Hotel, Kingdom at Victoria Falls, and Hwange Safari Lodge.
Source: African Sun retrenches over 200 (21/06/16)