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Enacy Mapakame

Business Reporter

Hospitality group, African Sun Limited, is confident the relaxation of travel restrictions in September and October will boost activity in the sector going forward on increased demand both at domestic and regional level.

Travel and tourism is one of the worst affected sectors by Covid-19 pandemic as economies effected travel bans in order to limit the spread of the pandemic. Domestic travel was also restricted which saw hoteliers temporarily close their facilities.

Zimbabwe and other countries across the globe have eased the lockdown restrictions, opening borders to allow international travel. On the domestic front, the quarter under review saw Government allowing intercity travel in September 2020, with the resumption of international flights starting on October 01, 2020. This has created fresh impetus for growth within the travel and hospitality industry and the whole economy.

“Operationally, the group has now opened all of its hotels after the Covid-19 induced closures earlier this year.

“The group expects the September and October 2020 relaxation of travel restrictions to boost domestic and regional demand going forward,” said African Sun in a trading update for the third quarter to September 30, 2020. The stabilising economic environment on the back of increased business activity and availability of foreign currency on the auction system, which has also tamed exchange rate should also be an added advantage for local businesses.

During the third quarter, African Sun indicated encouraging performance despite the adverse effects of the Covid-19 pandemic as compared to the second quarter.

The group more than doubled the number of room nights sold to 20 329 during the quarter under review from 8 144 in the previous quarter, with domestic demand being driven by Government and non-governmental organisations (NGOs).

Occupancy decreased by 37 percentage points compared to the same period last year. But quarter on quarter, occupancy improved to 14 percent from 5 percent, largely driven by the relaxation of lockdown restrictions, together with a number of promotional initiatives by the group to improve demand.

On a year to date (YTD) basis, occupancy was down 28 percentage points, compared to the prior year. Revenue for the quarter went down 78 percent in inflation adjusted terms to $260,88 million against same quarter in the prior year. YTD revenue decreased by 62 percent to $965,3 million against same period last year. The decrease is attributed to the Covid-19 pandemic and the related reduction in global travel and tourism, which required the complete suspension of all hotel operations at some point during the nine months ended 30 September 2020

“While group performance for the quarter under review continued to suffer from Covid-19, key group performance indicators in Q3 show a steady recovery from Q2,” said the group.

Going forward, cost containment initiatives adopted in the second and third quarters are expected to drive cash preservation mode in the fourth quarter and beyond.

However, the current resurgence in Covid-19 in source markets such as Europe, the United States of America and Asia pose another threat to recovery efforts.

Said African Sun: “The group expects this resurgence to negatively impact international business at least in the short to medium term.

“Despite the reopening of borders and resumption of international flights, most travellers are discouraged by the requirements to self-isolate or quarantine for extended periods upon arriving at the holiday venues. In the short term this will continue to hamper efforts to boost international tourism.”