RTG outlines operational strategies
LISTED hospitality concern Rainbow Tourism Group (RTG) has outlined various operational strategies aimed at boosting shareholder value as it believes its share price is trading at a discount to its net asset value.
Recently, the hospitality group told shareholders that it is engaged in negotiations for a potential acquisition of a yet-to-be-named complementary business.
Rainbow Tourism Group
It said if successfully concluded, the transaction may have a material effect on the price of the company’s securities.
In its 2022 annual report, the listed entity said it posted revenues of $24,5 billion in the period under review, which is an increase of 131 percent when compared to 2021.
The group chairman, Mr Douglas Hoto said the group’s financial position remains strong.
However, he noted that although financial sustainability underpins its shift to value protection and creation, this requires an unwavering focus on discipline, profitable growth that enables the group to invest in the future while providing an acceptable return to shareholders.
The Rainbow Hotel in Bulawayo
“Building a sustainable balance sheet with manageable levels of debt remains a primary material matter for RTG. The Group managed to extinguish its debt and maintained a robust plan to ensure the existing solid working capital base is sustained.
We do not believe these positive developments are aptly reflected in RTGs share price which currently trades at a discount to its net asset value. The Board is considering various options that are designed to increase value for shareholders,” said Mr Hoto.
Among the options to pursue include the expansion of the Group’s hotels portfolio in carefully selected areas around Zimbabwe.
It also seeks to focus on technology and digitisation through the activation and expansion of the Gateway Stream web and mobile application.
Added to that, Mr Hoto said another key focus area would be on expanding the Group’s reach in the tourism value chain through investment in the tour operations arm Heritage Expeditions Africa.
Occupancy for the period under review closed at 51 percent which is a 65 percent increase from the 31 percent posted in 2021.
City hotels conferencing business recorded positive performance during the year. The Group posted revenues of ZW$24,5 billion, 131 percent above ZW$10,6 billion posted in 2021.
The annual report noted that despite increased pressure from inflation, the Group’s growth margins for the year under review remained unchanged at 70 percent compared to full year 2021.
The improvement in gross profit margins is attributable to cost reduction measures that were put in place to mitigate the effects of increasing prices in the market.
To that end, the group posted an Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) of ZW$2,7 billion during the year under review which was 29 percent above the $2,1 billion posted in 2021.
Strong revenue performance coupled with a relentless grip on costs were key drivers to a healthy EBITDA performance.
Meanwhile, the hospitality group is angling to profit from the country’s 23 August elections.
“Zimbabwe will hold its general elections in 2023. The Group is set to take full advantage of the opportunities presented by the election season.
Heritage Expeditions Africa will provide transfers and activities while hotels are geared to meet the accommodation and meal requirements of institutions and individuals alike that will be involved in the elections.
“Over the years the Rainbow Towers Hotel and Conference Centre has been used as the National Command Centre for the elections and these elections will be no exception,” reads part of the report.-chronicle
