January Protests Haunt African Sun

Hospitality group African Sun Limited says occupancy levels decreased by 10 percentage points from 53% recorded last year to 43% in the five months ended May 2019, due to violent protests that occurred in mid-January.

In a trading update at the company's annual general meeting, CEO Edwin Shangwa said the January protests were a major setback to local, international and regional arrivals.

"The violent protests in mid-January were a major setback to our local arrivals resulting in cancellations and postponements of conferences," he said.

"The January protests also had a negative impact on our international and regional arrivals which have a longer lead time and are very sensitive to safety issues -- travel warnings."

The domestic market also impacted on occupancy levels as it was down 11% year-to-date due to the depressed economic environment, characterised by a slowdown in economic activity, spiking inflation, erosion of real income, shortages of foreign currency and fuel.

Revenues for the five months amounted to ZWL$48,3 million split as 56% and 44% between domestic and foreign, respectively.

This was a 131% growth in nominal terms compared to the same period last year.

The overheads to turnover ratio (the overhead costs of the business expressed as a percentage of the revenue) during the period under review was 51% compared to 57% comparative last year.

However, Shangwa said the company's borrowings were down by 31% to ZWL$181 000 and a total of ZWL$4,4 million borrowings were fully settled at the end of May.

The earnings before interest, tax, depreciation and amortisation margin were 37% compared to 18% recorded last year, indicating improved profitability, whilst gross profit stood at 77% from 69% recorded last year.

African Sun is planning to lure Indian visitors to increase its foreign clientele and has placed its Victoria Falls properties at the centre in growing its foreign business as the company enters the peak season.

Shangwa said the recent refurbishments of the company's facilities and increase in capacity had opened doors for new packaged self-drive business with the group's operators and this would take to effect from the third quarter of 2019.

He said the drought season had presented an opportunity mainly for city hotels as various organisations, including non-governmental organisations working on food distribution and other related aid, would be visiting the hotels.

Going forward, the company expects power, fuel and foreign currency shortages to impact service delivery, but have put in place mechanisms to mitigate these guest pain factors.

The company operates a number of hotels, resorts, casinos and timeshares in Zimbabwe and South Africa.

Source: January Protests Haunt African Sun (30/06/19)