Hotelier RTG returns to profitability

Rainbow Tourism Group (RTG) is optimistic of achieving sustainable growth after recovering from a loss-making position in the first half of the year.

The hotel management company, which trades its stock on the Zimbabwe Stock Exchange, says group performance to the end of the year would be underpinned by city hotels, which are poised to benefit from the “opening up of the economy to business travel”.

RTG also plans to grow the business through room expansion and diversification to non-hoteling activities that would complement the core business.

The company reported that it has projects “at various stages of development in the Victoria Falls, Harare and the Eastern Highlands”.

In the first six months ended June 30, 2018, RTG reported a post-tax profit of $213 993, a huge jump from a loss position of $290 451 in the comparative period in 2017.

The improved profitability saw basic earnings per share jumping to 0,009 cents from a loss of 0,016 cents in 2017.

Group turnover grew 18% to $13,7 million from $11,6 million recorded in the prior year.

“All RTG hotels registered growth in revenue during the first half of 2018 compared to the same period in 2017,” RTG chairperson Sijabuliso Biyam said in the company’s abridged financial report for the half-year period.

“The two Harare hotels registered a 42% increase in revenue to $6,4 million from $4,5 million in 2017. This is evidence of the opening up of the economy to business travel. It therefore gives optimism for sustained recovery for our city properties.”

Revenue growth by RTG was buoyed by the country’s political transition to a new leadership, the corresponding reform agenda and political stability which improved the country’s attractiveness to international visitors, including business travellers.

The increased business interest and international visits experienced during the election period boosted overall occupancy levels.

“Foreign revenues continued on an upward trajectory, registering a 24% growth to $4,7 million from $3,8 million, constituting a contribution of 33% of total revenue. This growth in foreign revenue contribution is encouraging as we continue to grow our share of the $1,2 trillion global tourism industry,” Biyam said.

The EBITDA (earnings before interest, tax, depreciation and amortisation) margin increased to 16% compared to 9% in 2017, driven by a combination of revenue growth and various cost reduction measures.

However, operating expenses increased 9% to $7,3 million from 2017’s comparative of $6,7 million as increased business activity, particularly conferencing at city hotels, negatively affected labour and electricity costs.

“Total costs increased at a rate (9%) that was 50% of the increase in revenues (18%). Finance costs remained unchanged at $574 000,” Biyam said.

The company’s net profit margin for the period was 2,34%.

In spite of increased profitability, total assets declined by 1,05% to $45,22 million from a 2017 comparative of $45,7 million. This yielded a return on assets of 0,47%.

Biyam said the company saw growth prospects on its mobile and web-based application, the RTG Gateway, which has added diversity to its tourism and hospitality options.

“Our efforts at creating alternative revenue streams from tour operations, both domestic and international, are now at an advanced stage. We will continue to report on this focus area,” Biyam said.

He also said the company was now well positioned to benefit from the global migration to internet-based business and would focus on digital commerce.

In the review period, revenue from e-commerce platforms grew by 49%.


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