Monday, December 5, 2011

Zim hotels to drive African Sun growth.

Hospitality group, African Sun, has achieved substantial revenue growth for the first time since the inception of dollarisation in 2009 owing to the adoption of a viable business model, group chief executive officer Shingi Munyeza has said. Revenue from continuing operations during the year ending September 30 2011 stood at US$48 796 506 up 22% from US$39 947 181 achieved during the same period last year.

The group’s southern African operations contributed US$48 018 485 to total revenue while West African business contributed US$778 021. Munyeza said the group’s operations in Zimbabwe had performed exceptionally well.

Speaking at an analysts briefing last week, Munyeza pointed out that the hospitality group would focus on ensuring that the Zimbabwe hotels spew out more cash as well as keeping an eye out for management contracts that may arise in the region. “On our strategy going forward, we intend on dominating the Zimbabwean market which has proved to be profitable,” said Munyeza, adding that there would be no underlying costs from regional growth.

African Sun intends to acquire long-term lease arrangements, management contracts and engage in partnerships with property developers.
This strategy, he said, should lead to the group growing from the current 2 926 rooms under management to 5 500 rooms by 2012. African Sun operates and manages a hotel in Ghana, five in Nigeria and 13 in Zimbabwe.

“At fiscal level, we need the issue of Air Zimbabwe to be urgently addressed as the absence of a domestic flight is negatively impacting business,” said Munyeza.

Caribbea Bay resort and Hwange Safari lodge have been negatively affected by access issues, but Munyeza said the group is devising strategies of routing excess traffic from the Victoria Falls to Hwange.

He said that conferencing business in Victoria Falls is picking up at a much faster pace than anticipated.
“Although there are 28 flights per week into Victoria Falls, a capacity increase of 300% is required in this area,” he said.

With regard to access market developments, Munyeza said the increase of 43 weekly flights to Harare and the introduction of Emirates flights into Harare by February next year, bodes well for the group.

Before February 2009, the protracted wrangling between the country’s main rival political parties had resulted in the plummeting of international flights into the country, negatively affecting tourism arrivals.

The group’s finance director Nigel Mangwiro said the disposal of the Grace and Lakes hotels in South Africa, as well as restructuring the head office had an impact on the business model. African Sun pulled out of an operating agreement with the South African hotels earlier this year citing depressed business volumes and escalating costs.

“The business model is looking positive from a cash flow perspective as the restructuring exercise will bring about savings of at least US$2,4 million per year,” he said, adding that this development would have positive trickle down effects on the bottom line.