AfSun in US$25mln refurbishment

By Anyway Machani

AFRICAN Sun limited has embarked on a US$25 million revamp for its properties, the listed firm confirmed in its latest trading update for the nine months and third quarter ended 30 September 2019.

Properties targeted for facelifts include Troutbeck Resort and Great Zimbabwe hotel.

“We have commenced the refurbishment of Troutbeck Resort, Carribea Bay Resort and Great Zimbabwe Hotel albeit at a much slower pace as funding commitments and long term planning have been hampered by the 20% foreign currency surrender, as well as the thirty (30) days liquidation period. We are in the process of completing mock-up rooms for Hwange Safari Lodge and The Victoria Falls Hotel, the rollout of which is expected in the first quarter of 2020.

“In the quest to broaden our reach, the Group added high end Camp Sites at Great Zimbabwe Hotel and Carribea Bay Resort in the third quarter. This new product, known as “glamping”, because of the more luxurious feel compared to a standard campsite has already hosted the maiden group of guests at Caribbea Bay Resort in the October 2019.

“The market is excited about this new development and we anticipate an increase in foreign arrivals at these properties as we go into 2020. An official launch of this product will be announced to the market soon, which launch will include a completed Great Zimbabwe Hotel refurbishment,” reads the update.

African Sun lamented the trading environment in Zimbabwe for jeopardizing their business operations.

“The economic environment remained turbulent characterised by significant policy reforms, inflation, power outages, erratic water supply and reduced aggregate demand across all sectors during the entire nine months under review. The first quarter was significantly impacted by violent demonstrations, and stay-aways which resulted in cancelled bookings from both the domestic and international market.

“The second and third quarters, as well were negatively affected by hyperinflation, weaker demand on the local market and a decline in foreign tourist arrivals. A number of reforms have been adopted. Among them, being the currency reforms, which abolished the former multi-currency regime and introduced the Zimbabwean Dollar (“ZWL”) as the sole legal tender for all domestic transactions. These currency reforms coupled with inflation pose significant challenges in pricing and creates distortions in financial reporting,” they noted.

The combined impact of these macroeconomic and political developments on the group’s business was reflected in the reduction in volumes from both local and export markets as explained under volume analysis.

Occupancy for the third quarter closed at 51% representing a 24-percentage points decline from 75% recorded in the same quarter last year. This is represented by a 32% decline in room nights sold from 108,448 reported in the comparable quarter last year to 73,929 this year. Business mix for the third quarter with regards to room nights was 59% local and 41% export. The revenue split (in historical terms) for local and export for the same quarter was 46% and 54% respectively.

For the nine months year-to-date, occupancy closed at 47% representing an 11-percentage points decline from 58% recorded in the same nine month period last year due to reasons aforementioned. This decline represents a 19% drop in room nights sold to 206,454 from 253,661 reported in the same period last year. The decline was across all markets, with domestic and export room nights reducing by 20% and 26% respectively.

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