African Sun seeks better return after refurbishment “Our cash deployment strategy mainly focuses on completing targeted hotel refurbishments to enhance guest experience,” said group chairman Constantine Chikosi.

Enacy Mapakame

Listed hospitality group African Sun Limited wants to leverage its hotels and facilities refurbishment programme, which is expected to enhance ambience and guest experience, at a time the group is anticipating increased business driven by both foreign travel and domestic market.

This also comes as the group is progressing well in its recovery journey, surpassing pre-Covid-19 occupancy levels at its operations during the year to December 31, 2023.

While the business environment may remain uncertain due to the adverse impacts of the El Nino induced drought on agriculture, the United Nations World Tourism Organisation (UNWTO) projections of improved arrivals are encouraging for the hospitality group and the tourism industry in general.

The UNWTO projects international tourist arrivals to fully recover to pre-pandemic levels in 2024, with initial estimates pointing to a 2 percent growth above the 2019 levels, underpinned by increased air connectivity, and continued recovery of Asian markets and destinations.

On the domestic front, African Sun anticipates yield on the growing demand for Meetings, Incentives, Conferencing, and Events (MICE) business as well as benefits from several high-profile events, including the just-ended Zimbabwe International Trade Fair (ZITF) and the Victoria Falls Carnival (which event we are hosting at Elephant Hills Resort and Conference Centre), among others.

These create a basis for the group to maintain its focus on refurbishing its facilities.

“Our cash deployment strategy mainly focuses on completing targeted hotel refurbishments to enhance guest experience,” said group chairman Constantine Chikosi.

During the financial year 2023, the group continued to prioritise strategic capital allocation initiatives. According to Chikosi, this included the completion of the refurbishment of the remaining 46 rooms at Hwange Safari Lodge and the refurbishment of the public areas which he said is progressing well.

The refurbishment of the public areas at Troutbeck and the Great Zimbabwe Conference Centre was also completed during the period under review.

The initiatives will also help limit the adverse impacts of the discontinued operations- the closure of The Kingdom at Victoria Falls Hotel.

According to the group, the discontinued operations loss of US$0,89 million was recorded in the past financial year largely comprising property and equipment impairments post the closure of The Kingdom at Victoria Falls Hotel and the Makasa Sun Casino. This follows the mutual termination of the lease at The Kingdom at Victoria Falls Hotel, due to an untenable lease tenure.

The group will continue looking for suitable expansion opportunities in appropriate locations and with the right timing and funding structures.

Meanwhile, the group recorded a revenue growth of 30 percent to US$54,73 million compared to the same period in the prior year. The improved performance was driven by firmer Average Daily Rates (ADR) which closed the year at US$110, representing an increase of 39 percent against US$79 achieved during the comparable period as a result of changes in customer mix.

According to the group, hotel occupancies increased to 52 percent, which was 6 percentage points above 2022.

Revenue per Available Room (RevPAR) for accommodation revenue increased by 58 percent to US$57, up from US$36 in the comparative period.

However, further growth was counterbalanced by an increase in operating expenses stemming from exchange rate fluctuations and inflationary pressures, tempering the overall financial performance.

African Sun’s operating expenses, excluding depreciation, increased by 43 percent to US$27,63 million compared to US$19,29 million in 2022 driven largely by exchange rate volatility, inflationary pressures, and the crystallisation of expenses in US dollar as the economy continued to dollarise at a rapid pace.

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