African Sun sets aside US$11m in capex for 2024
HOSPITALITY group, African Sun Limited (African Sun) has set aside US$11 million in capital expenditure for the year, which includes information technology (IT), product and property improvements.
This comes as African Sun is anticipating positive yields on the growing demand for meetings, incentives, conferencing and events business as well as several high-profile events.
As previously reported in our sister paper, The Standard, funding for the capex will come from normal operating cash flows and debt finance, as the firm entered the year in a liquid position with a current ratio of 1,76.
In its recent 2023 annual report for the period ended December 31, 2023, African Sun acting chief executive officer Laurie Ward said they had a strategic plan in place that would leverage the planned capex.
“The strategic plan acknowledges the vital importance of an advanced, appropriate, best in class digital infrastructure, with a budget of US$1,5 million allocated for upcoming IT system upgrades at both hotel and head office level,” he said.
“Regarding capital distribution, we have earmarked over US$5,7 million to capex in 2024 and a further US$5,3 million for product and property enhancements and improvements.”
Ward said the group was also planning to raise US$8 million this year to allow for the completion of the Victoria Falls Hotel and Hwange Safari Lodge refurbishments and to make a start on the Elephant Hills public areas.
The group’s capex commitments is in line with its vision, “To be a leading provider in hospitality and leisure operations”, which the board approved in 2022.
In this vision, operational, financial, ESG and capital allocation targets were set for the next 10 years up to 2032, with a focus on the medium term on property refurbishments, as highlighted above.
“To enhance the competitiveness and appeal of our properties with both local and international guests, a comprehensive strategy of refurbishing targeted hotels remained (and remains) a key imperative and priority,” Ward said.
“This strategy also involves a parallel process of rebranding and repositioning our properties to align with market trends and consumer expectations. By conducting market research and leveraging international brand experts, our properties will shortly undergo a strategic rebranding process and a fresh ‘brand promise’ that will resonate with our target audience.”
Last year, the group had spent US$7,4 million over the past few years on refurbishments and an additional US$1 million on real estate development under the Dawn Properties portfolio, all funded from internal resources.
The group’s real estate division is also expected to contribute to revenue, profitability and cash generation during 2024, as Dawn Properties endeavours to sell non-core assets and excess land holdings.
“While macroeconomic uncertainty around inflation and currency instability persists, we are fortunate to have the liquidity and financial flexibility to make prudent investments, aligning with our vision of ensuring a seamless and enjoyable guest experience,” African Sun chairperson Constantine Chikosi said.
“During 2024, we have planned significant capital investments into enabling information technology and further hotel refurbishments. These investments set the stage for a sustainable growth trajectory for the group and enhanced returns for our shareholders.”-newsday
