Tourism tax affects African Sun

HARARE - Zimbabwe's largest hospitality group African Sun Limited (ASL) says it has recorded an eight percent drop in revenues to $50,15 million in the full year to September 2015 due to a mandatory 15 percent value added tax imposed on the hospitality industry.

In the period under review, the group’s average daily rate decreased by seven percent from $96 achieved in the same period last year to $90 in 2015 — partly affected by the introduction of value added tax on foreign revenue.

“Occupancy increased by one percentage point to 48 percent from 47 percent. The drop in revenue per available room was thus capped at four percent, from $45 to $43,” ASL said.

The listed hotel concern, which recently entered into a partnership agreement with the Legacy Group of Hotels to manage five of its hotels, also registered a loss of $3,36 million compared to a loss of $2,29 million registered in the full year to September 2014.

“The current year loss was mainly driven by the $4,23 million that was incurred by the company on other expenses which include retrenchments and separation costs of $2,02 million,” ASL chairman Herbert Nkala said yesterday.   

This comes as in August this year ASL fired nine managers as the group moves to reduce costs in a difficult operating environment.

Nkala noted that loss from discontinued operations – Amber Accra Hotel, Ghana – was $1,97 million from a loss position of $1,64 million.

In the period under review, the hospitality concern changed from its traditional hotel management model to a hotel investments model, which is expected to drive the group’s revenue in the future.

Nkala said under the hotel investment model, the group exited its Ghana and Nigerian foreign operations and established five strategic business divisions.

“Following the change of business model, discontinuation of the loss making operations in Ghana and Nigeria as well as the recent retrenchments, the group is poised to move from a loss making to a profit position,” he said.

“We expect our foreign arrivals, particularly for the Victoria Falls properties, to rebound, not only due to the positive change in our business model but also due to the curbing of Ebola epidemic and the expansion of the Victoria Falls airport,” Nkala said.

ASL, however, said the domestic market is expected to remain subdued, with lower demand and pressure on rates.

The hotel group did not declare a dividend in the 12 months to September, 2015.

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