HARARE – Hospitality group, Rainbow Tourism Group (RTG) swung back to profitability after its profit before tax jumped 364 percent to $1,1 million for the six months to June 30, 2018, from a loss position of $416 000, thanks to restructuring and growth in conferencing business.
The group reversed a loss for the period by 173 percent to $213 993 profit compared to a $290 451 loss recorded in the comparable prior year period.
Revenue for the period grew 18 percent to $13,7 million from $11,6 million as all hotels recorded growth.
Its two Harare hotels recorded a 42 percent increase in revenue to $$6,4 million from $4,5 million, as the economy is opening up to travel business.
Occupancy increased by 6 percent to 56 percent from 53 percent achieved last year. Revenue per average room rose 23 percent to $43 from $35 in prior year comparable period.
“The company performance continued to improve on all indices,” said chairman Sijabuliso Biyam in a statement accompanying the group’s financial results.
“The improvement is attributable to a successful low season’s strategy, growth in conferencing business as well as revenue from foreign currency generating channels including e-commerce platforms,” he said.
During the period under review, foreign revenues continued on an upward trajectory registering a 24 percent growth to $4,7 million compared to $3,8 million constituting a 33 percent of total revenue.
Biyam said: “This growth in foreign revenue contribution is encouraging as we continue to grow our share of the $1,3 trillion global tourism industry.”
RTG’s focus on digital commerce has driven revenue from e-commerce platforms which have grown by 49 percent.
Biyam said the group was well positioned to benefit from the global migration towards internet based businesses.
In February this year, RTG 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.
On the RTG Gateway, the market can book for hotels, restaurants, boat cruises, transport services and make purchases using their mobile devices as well as make payments online.
Gross margins improved to 67 percent from 65 percent recorded last year notwithstanding the price distortions that were caused mainly by foreign currency shortages.
Earnings Before Interest, Tax Depreciation and Amortisation (EBITDA) margin for the period closed at 16 percent ($2,2 million) from 9 percent ($1,1 million) in the prior comparable period, representing a growth of 110 percent, which was in response to revenue growth as well as cost reduction measures.
Operating expenses for the period increased by 6 percent to $7,3 million on increased business activity especially conferencing for city hotels which had the impact of increased variable costs such as labour and electricity.
Finance costs remained unchanged at $574 000.
Biyam said the group was upbeat of maintaining the growth trajectory with opportunities presented in the sector as the economy is opening up to the world.
“Tourism globally depends on a strong and positive brand that guarantees travelers their safety, security and unique experiences.
“The changes that have taken place culminating in a successful holding of the country’s elections have sent the right message to the world,” he said.