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Tawanda Musarurwa Senior Business Reporter
Hospitality group, African Sun, managed to sidestep a dip in occupancy levels in 2019 to improve profitability for the year.

The group has reported a 68 percent jump in inflation adjusted revenue for the year to December 31, 2019 to $914 million.

This was largely driven by the average daily rate (ADR).

ADR represents the average rental income per paid occupied room in a given period. ADR, along with the property’s occupancy are typically the foundations for a hotel property’s financial performance.

African Sun’s ADR grew by 102 percent from $869 recorded last year to $1 759 as the group’s hotels continued to align room rates with interbank exchange rates during the year.

Occupancy for the year, however, was depressed as it closed at 48 percent, compared to 59 percent recorded last year (2018).

“The local market was negatively affected by the January 2019 protests and low disposable incomes, with room nights declining by 15 percent from 214 892 reported last year (2018) to 181 698 for period under review,” said chairman Alex Makamure.

“The international market has also been affected by the general slowdown in world travel by 3 percent, as well as random actions of civil unrest such as the Hong Kong strikes, which affected our arrivals in the Victoria Falls destination, in particular for The Kingdom Hotel at Victoria Falls.”

Due to these macroeconomic factors, African Sun’s foreign room nights was down by 21 percent from 134 639 reported last year to 106 526 during the period under review.

Inflation-adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) of $387,94 million was recorded by the group, which was 187 percent above last year mainly in response to inflation pressure.

Financing costs also jumped significantly during the period under review.

African Sun’s net financing costs for the year amounted to $8,8 million, an 83 percent increase from $4,8 million reported the previous year.

“The increase is mainly attributable to lease liabilities as finance costs on borrowings decreased by 93 percent,” explained the chairman.

Inflation adjusted profit before income tax for the year stood at $338,01 million, a 302 percent growth from $83,89 million reported in the prior year.

And profit for the period rose 227 percent to $187,04 million, from $57,21 million in the prior comparable period.

Notwithstanding two interim dividends that the group declared during 2019, the board did not approve a dividend for the year due to the “impact and uncertainties caused by the Covid-19 pandemic”.

Going forward, although the group – like most in the hospitality industry – has been hit hard by the coronavirus pandemic, management said long-term strategic goals remain intact.

“From an operational perspective, we remain largely on our strategic track against strategy.

“During the preceding year we completed several refurbishments and launched new product offerings including glamping and Sun Leisure Tours,” said managing director Edwin Shangwa.

“Our entire portfolio of products is in excellent condition and we look forward to serving our guests better going forward.”