Kingdom Hotel closure weighs on African Sun earnings
Hospitality group, African Sun Limited, recorded an after tax loss for the half year to June 30, 2023 of US$1,81 million, primarily attributed to the challenging macro-economic environment obtaining in the country.
During the period under review, costs escalated at a faster pace than revenue, exacerbated by losses from discontinued operations, which incurred a loss of US$0,75 million.
Group chairman, Constantine Chikosi, said this loss primarily included property and equipment impairments following the closure of the Kingdom Hotel in Victoria Falls.
The period under review was also characterised by currency volatility as inflationary pressures continued to bite.
The local currency experienced significant currency depreciation in the first half of the year, particularly in May and June. Statistics show that the local Zimbabwe dollar lost 88 percent of its value over the six-month period to 30 June 2023, leading to heightened inflation in the second quarter of 2023.
“While the official and parallel market exchange rates began to converge, the ongoing disparity remains a significant concern, negatively affecting operating margins and intensifying operating Costs.
“Government interventions aimed at stabilising the exchange rate and curbing inflation have shown progress,” said Chikosi.
In terms of revenue performance, the group achieved US$22,36 million in revenue, reflecting a 2 percent increase compared to the same period last year.
The growth was driven by higher business volumes, with hotel occupancy increasing by 5 percentage points to 46 percent.
Operating expenses, excluding depreciation, amounted to US$13,91 million, a 36 percent increase compared to the prior year.
This was driven by inflationary pressures and increased volumes, resulting in higher variable costs.
“The group is actively monitoring and implementing cost-saving initiatives,” said Chikosi.
Despite the challenges, the international tourism sector is displaying resilience in its recovery from the pandemic, despite enduring significant economic and geopolitical challenges.
According to the United Nations World Tourism Organisation (UNWTO) World Tourism Barometer, global international arrivals reached 80 percent of pre-pandemic levels in the first quarter of 2023.
During The period under review, this recovery stimulated an increase in export revenue contribution, which rose from 20 percent to 25 percent of total hotel segment revenue.
However, the UNWTO Panel of Experts has cautioned that persistent high global inflation and escalating oil prices, translating into increased transport and accommodation costs, could potentially hinder the full-scale recovery of international tourism in 2023.-ebusinessweekly
