Diversified investment holding company, Brainworks Capital, which has operations in the hospitality and leisure industry, is expecting improved business performance for the 2018 financial year following a better than expected first quarter of the year in which most of its city hotels were fully booked.
Brainworks CEO Brett Childs, said business in the tourism and hospitality industry was booming in the first quarter of the year, breaking away from the usual trend where the first few months of the year are low key.
“It has been a fantastic start to the year. Generally, this time of the year is our down season, our quiet season mainly because in the Victoria Falls area you can’t really see the falls because there is so much water going down the falls,” said Childs.
“But we have seen our numbers way up compared to the same period last year, so we are very excited about 2018 actually being a bumper year.
Childs said the forthcoming elections bodes well for the tourism sector as the country opens up to international observers and monitors.
“In the hospitality business, elections have a positive impact on us because our city hotels are full which is the general trend during the election time as monitors and observers come in to see what is happening. Currently, occupancy rates are up compared to last year,” he said.
Childs, however, said investors were still assessing the political situation but numbers of arrivals might increase after elections.
“On the counter side is that what we are hearing from certain investors is that they are waiting for elections to take place. I think generally my feedback from investors in Europe is that it’s a wait and see. If the elections are declared free and fair by the good and great then I think we will see Zimbabwe being really open for business,” Childs said.
Commenting on the foreign currency challenges that has had a negative impact on most business, Childs said Brainworks was benefiting from its hospitality business which generates foreign currency.
“Fortunately, we are a net exporter, African Sun, our hospitality business generates over 50 percent of its income in foreign currency. So we are in a position that gives us sufficient currency to import resources we need in our hospitality industry. So we are not as impacted as other companies are,” he said.
Investors wary of forex challenges, elections
He, however, said the foreign currency challenge has been a major concern to would be investors.
“Certainly, it’s a factor with every investor we speak to. The new Government and foreign currency (shortages) is always on the agenda to discuss and hopefully the new Government will be able to resolve this issue in the forthcoming months.”
Childs said the group has not been able to upgrade its hotels as promised when the group partnered South Africa’s Legacy Hotels and Resorts as it struggled to raise capital.
“It’s been quite difficult to raise capital to actually do the regeneration of some of our hotels but we are very focused on our flagship which is our joint venture with Meikles at Victoria Falls Hotel, we have done significant revamping there, and now we are spending another $6 million at the same hotel.
“On other hotels, we have spent $1 million in revamping and painting the Caribbea Bay, where we have changed its colour to white from the bright pink.”
Childs said the bigger hotels, Elephant Hills and Monomotapa needed big cheques and “that’s what we are working on right now. We have exit from financial services.”
“We are going to build a cash pile which we can assists African Sun in regenerating the bigger hotels, basically Elephant Hills and Monomotapa Hotel.”
There are also plans to uplift Hwange Safari Lodge to a Four Star hotel from the current Three Star.
Commenting on the smaller portion of Harare Gardens which was acquired for the development of a state-of-the-art conference centre among other facilities Childs said: “We have not developed Harare Gardens because we are still waiting for the title deeds but we have paid for it.”
He said plans are also to regenerate the Harare gardens and make it look beautiful even for the Monomotapa Hotel guests.
Brainworks is currently in the middle of raising more capital amounting to $13 million with orders for $10 million having been secured already.
The shares are being issued at a discount to the company’s net asset value as investors expect Zimbabwean assets to be at a discount. Childs said the company will also consider listing on the ZSE after elections.