eBusiness Weekly
Enacy Mapakame
Hospitality and tourism companies on the Zimbabwe Stock Exchange are poised for growth this year as they angle to cash in on the anticipated boom of the local tourism sector.
Broadly, the tourism sector is pushing for growth and looking at increasing its contribution to the country’s gross domestic product (GDP) and foreign currency inflows which stood at around 11 percent and 5 percent, respectively last year.
Listed hospitality and tourism stocks – Rainbow Tourism Group (RTG), African Sun Limited (ASL) and Meikles Africa Limited experienced improved earnings in 2017 and are also anticipating to maintain that growth trajectory.
Market watchers maintain the new administration will attract city tourism and boost earnings for RTG and ASL that are well positioned to tap into this.
Additionally, domestic tourism is expected pick up as local liquidity increases while forex challenges persist thereby forcing locals to spend their money in Zimbabwe.
The commissioning of the Victoria Falls International Airport is also seen as a major driver for the sector’s growth. Already, interest has been generated from airlines to add Victoria Falls to their routes and this will boost tourism in the medium to long term.
For ASL, the group is angling on this anticipated growth while the 2018 harmonised elections will increase bookings especially in urban centres as election observers flock the country.
President Emmerson Mnangagwa has declared the elections will be open to foreign observers.
“Our hotel operations are expected to benefit from key activities in 2018, which include elections, infrastructure development and other government projects,” said ASL chairman Herbert Nkala.
“The Victoria Falls airport has proved to be a game changer, as additional flights and airlines are expected in 2018. Conferencing business has already significantly responded to the government’s “Zimbabwe is Open for Business” theme, shown by the seminars, roadshows and planning sessions that we are hosting in our hotels,” he said.
In the year to December 31, 2017, ASL reported a 19 percent growth in revenue to $51 million following an increase in occupancy which was at 52 percent compared to 44 percent in the prior year.
ASL said the increase in occupancy was recorded in all three-market segments, with the international market posting the highest growth of 29 percent, domestic 17 percent and regional at 3 percent.
The 17 percent growth in the domestic market was partly due to the flexible pricing system implemented during the year.
Nkala indicated the same momentum is filtering into the later months as forward bookings were surpassing 2017 forecast.
RTG’s revenue for the year to December 31, 2017 amounted to $27 million, which was 12 percent above prior year while profit for the year increased 115 percent to $0,6 million from a loss position of $4 million.
Average occupancy increased by 4 percentage points to 57 percent. RTG is expecting to maintain this growth as it pursues expansion opportunities especially in Victoria Falls where growth in passenger numbers is anticipated to continue on an upward trajectory.
In February this year, RTG also launched an integrated mobile application RTG Gateway, a first for the industry which is expected to boost domestic tourism and enhance the ease of doing business within the tourism and hospitality sector.
The application is expected to promote domestic tourism by increasing visibility of smaller brands in the country while providing convenience in service delivery across value chains as it enables the market can book for hotels, restaurants, boat cruises, transport services and make purchases using their mobile devices as well as make payments online.
For Meikles, whose year end is in March, focus would be on increasing its EBITDA performance going forward.
The diversified group said revenue from its hospitality division in the half year to September 2017 increased 13 percent to $8,7 million and the growth was primarily attributable to a surge in tourist arrivals in Victoria Falls.
Room occupancy grew by 4,59 and 13,14 percentage points at Meikles hotel and Victoria Falls hotel, respectively. The average room rate grew marginally at Victoria Falls hotel and the group anticipates to maintain this upward trajectory.
Overall, various refurbishment projects by the hospitality groups are also expected to attract more tourists, both domestic and international.
In addition, the South African rand which started showing signs of strengthening post year-end, has been viewed as a scenario likely to positively influence arrivals from South Africa and the region going forward.
