Beitbridge hotel weighs RTG down

HARARE - Listed hotelier Rainbow Tourism Group (RTG) recorded a slump in earnings before interest tax and depreciation and amortisation (Ebitda) for the half year to June, due to slow operations at its newly-opened Rainbow Beitbridge Hotel.

Tendai Madziwanyika, RTG group chief executive told analysts briefing that the Ebitda loss was a direct result of high start-up costs and low revenues. The Zimbabwe stock Exchange-listed hotelier’s Ebidta stood at $1,5 million from $1,6 million recorded prior period comparative.

“The drop in Ebitda was mainly due to the newly-opened Rainbow Beitbridge Hotel, which posted an Ebitda loss of $350 000,” he said.

The group, which recently embarked on a retrenchment exercise for head office staff, is continuing with its staff costs realignment. RTG spent $830 000 in retrenchment costs after it laid off 68 employees in August.

Madziwanyika noted that in the face of a depressed economic environment in which revenue streams were also down, they believed “cost management is where the game will be won and lost in the foreseeable future”.

An operating loss of $309 219 was recorded for the period under review from a positive out turn of $29 049 during the same period last year.

Occupancies for the local hotels, excluding the Beitbridge Hotel increased from 48 percent to 52 percent.

Total debt stood at $23,5 million for the period under review, from $23,9 million as at December 31 2014.

“This is despite the $3,5 million used to fund furniture, fittings, equipment and service stocks for the new operation,” the RTG boss said.

A $13,5 million revenue was recorded as borrowing costs ate into the group’s revenue.

RTG recorded a gross profit of $139 000, a 32 percent increase as the group benefited from a tax credit of $448 429.

Madziwanyika attributed the growth in revenue to a 43 percent growth in arrivals from Europe.

He said the group had adopted a “market penetration pricing strategy” with the Beitbridge Hotel.

“The prices in Beitbridge at the moment are so that we attract customers, however the hotel will be officially opened before the end in a move that will increase our geographical spread in strategic parts of the country,” he said.

He added the group’s market share had grown in the period under review to 28 percent from 23 percent as at December 2013, against an industrial fair share of 25 percent.

No dividend was declared for the period under review due to the group’s obligations to form pre-existing loan covenants.

Comments (1)

I stayed at that hotel 3 months ago and have no intention of doing so in the future. For a brand new facility the hotel lacks wifi in most rooms (even though they claim there is), the toilets are mounted way too high you wonder if there was a licensed architect or project manager. The workmanship is so appalling the whole thing looks like a renovation. Pretty disgusting for a brand new facility.

Moe_Syslak - 29 September 2014

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