The Rainbow Towers Hotel and Conference Centre recorded the highest occupancy of 76 percent in May 2013 and another record occupancy of 78 percent in November 2013
ZSE-listed Rainbow Tourism Group is forecasting a 10 percent growth in revenues and RevPar in the current financial year to December as the group hopes to sustain the momentum which saw them overturn a $5,8 million loss at the end of last year. The group posted its first full-year profit since dollarisation with the bottomline at $1,09 million, a $7 million turn from a loss of $5,88 million. Earnings amounted to 0,065c per share.
What worked in the group’s favour in the year to December was the successful restructuring of the balance sheet and cost reduction. Short-term debt had been reduced by $12 million to $4 million after the conversion of $10 million to long-term and the target was to eliminate the position by June/July. The funding gap was at $3,8 million from $9,4 million.
Chief executive Mr Tendai Madziwanyika told analysts yesterday that the group had been able to service its debt without any challenges. The rights issue of $4,5 million was equivalent to cash generated of $4,3 million.
“We are very excited about this because it means shareholder cash has come back in the same year.”
The interest bill was down $1,9 million resulting in 51 percent savings. The cost came down to 11 percent from 19 percent.
“We will focus greatly on this and we hope to reduce the burden to 7 percent.”
Finance director Mr Napoleon Mutukwa said the interest cover of EBITDA is 2,4 and the target is to grow the index to 4 times. The current ratio had improved to 1.03. The gearing moved 17 percent to 59 percent.
“This could have been around 40-41 percent had we not included the Beitbridge property,” said Mr Madziwanyika.
The group managed to reduce accumulated losses by 15 percent while equity improved by 50 percent to $16,8 million. Costs reduction targets had been met, Mr Madziwanyika said. Costs of sales were down 18 percent and centrally procured goods were reduced by 16 percent resulting in savings of $500 000.
“This is exactly what we promised. We are now going 100 percent on borehole while we had a saving of 18 percent on electricity.”
The group would continue to enhance debtor days after they reduced 50 percent to 38 days. Cash generation had improved seven times to $4,3 million from $614 000 cash last year.
“We will be monitoring our cost index for continuous improvement,” said the CEO.
The group is targeting a 15 percent reduction in costs this year. Staff costs as a percentage of revenue were at 36 percent from 43 percent.
“This is set to improve if revenue rises. The average for second half was 31 percent and this always informs the position for the following year.”
The target is to bring the ratio down to 28 percent. The group had plugged leakages, fired 21 people in the process resulting in cost savings of $1 million. In terms of operations Mr Madziwanyika said occupancy was up 9 percent to 47 percent although the figure could have been higher had the Mozambique operations not been subdued.
Zimbabwe occupancy was up 15 percent to 54 percent. The target is to grow occupancies by 9 percent again this year. RevPar was up 8 percent to $39. Zimbabwe was 13 percent ahead to $44. As a result revenues were up 6 percent to $29,3 million. Zimbabwe operations revenue was up 9 percent to $27,7 million. Average revenue per room grew by 16 percent to $34 100 from $29 500.
The group had managed to grow its market share by 27 percent in the period. The Rainbow Towers Hotel and Conference Centre recorded the highest occupancy of 76 percent in May 2013 and another record occupancy of 78 percent in November 2013.
On the global front international tourist arrivals in all destinations grew 5 percent in 2013, reaching a record 1,067 billion arrivals compared to 2012 arrivals of 1,035 billion. UNWTO is forecasting a growth of 4-5 percent in 2014.
Arrivals into RTG were up 26 percent mainly boosted by an increase in American tourists. As a result foreign revenues into the group rose 24 percent to $5,2 million. This is a $1 million dollar growth on 175 rooms stocks. The foreign business mix increased to 28 percent.
Mr Madziwanyika said RTG will continue to focus on reviving business from the traditional source markets and growing volumes from emerging markets.
“The growth from the Americas will continue while efforts will be made to revive the Asian markets.”
America volumes were largely pushed from the South African office. After re-engineering the office, revenues of $2,5 million were achieved compared to $1,5 million in 2012. The monthly turnover went up to $350 000 in October from a monthly average of $110 000. Foreign business revenues were $5,2 million compared to $4,2 million in 2012. – FinX.