Africa Sun first quarter volumes depressed Elephant Hills Resort in Victoria Falls is one of African Sun’s major hotel properties dotted around Zimbabwe

Enacy Mapakame

Business Reporter

Listed hospitality group Africa Sun Limited experienced depressed business volumes for the first quarter to March 31, 2023 as occupancy closed the period at 39 percent.

According to the group, this was a decline of 3 percentage points from the same period last year.

Both of the group’s hotel operating segments recorded declines in occupancy levels for the period. City hotels went down 51 percent compared to 56 percent during the same period last year while resort hotels reported occupancy levels closed at 23 percent from 26 percent in the same period in the prior year.

“Despite the waning impact of Covid 19 and the concomitant announcement by the World Health Organisation that it was no longer a public health emergency of international concern, foreign business remains depressed at 20 percent whilst domestic guests anchors business performance with a contribution of 80 percent,” said the group company secretary Venon Musimbe in a trading update for the quarter.

As a result of the reduced business volumes, total revenue for the quarter stood at US$7,9 million, which was down 2 percent from US$8,02 million recorded during the same period last year due to depressed business volumes.

Revenue per available room was up 2 percent on the prior year comparable period while average daily room rate rose by 10 percent.

The macroeconomic environment during the review period was not easy but continued to be characterised by challenges ranging from inflationary pressures to foreign exchange rate volatility.

The Zimbabwe dollar liquidity crunch persisted during the quarter under review, which combined with other factors led to the economy being substantially US dollar driven.

The Reserve Bank of Zimbabwe (RBZ) in its first monetary policy statement of 2023 advised that approximately 76 percent of transactions in the local economy are now being conducted in US dollars.

As a result, the group witnessed its revenue and expenditure notably skewing toward US dollars, with monthly averages of 60 percent and 40 percent of the group’s revenue being earned in US dollars and Zimbabwe dollars, respectively.

“Based on the fact that the group now primarily generates its revenues and incurs its costs substantially in US dollars, the group changed its financial reporting functional currency from Zimbabwe dollars to US dollars effective 1 January 2023

“The disparity between the parallel market exchange rate and the official exchange rate continues to exert pressure on operating margins as there is a notable mismatch between the exchange rate used by suppliers and the exchange rate used to liquidate foreign currency into Zimbabwe dollars and required for the pricing of goods and services in Zimbabwe dollars.





You Might Also Like