RTG Pursing an asset-light model to raise revenue.

By Malcolm Meja

Diversified tourism solutions group, Rainbow Tourism Group (RTG) will pursue an asset-light growth model in raising revenue for the group. The strategy will work hand in glove with the prevailing rooms portfolio to grow the groups diversification strides.

This year the firm created two tour operating arms specializing on inbound and outbound travel. Exotic Travel International (ETI) a subsidiary based in the New York, United States and Heritage Expeditions Africa, the local arm that will sell packages for destinations around the country and the region.

The two businesses will represent new revenue streams that tap into latent demand for transporting and providing activities to a cultivating tourism customer base.

Speaking at the financial results briefing yesterday RTG Chief executive officer Tendai Madziwanyika indicated the company was targeting towards US$3 million in net revenue from this speciadlised unit of the business.

“We are targeting towards US$3 million in net revenue from this speciadlised unit of the business. The Key model and strategy is because of our nature and size and it’s an efficient model. We will leverage on that to help grow our balance sheet,” he said

More so, in pursuing new revenue streams the company will explore benefits of innovation on the ITC front. The company has invested in a mobile and web application stream. That presents an opportunity for the company to leverage its income generation using ICTs. RTG has booked 621 rooms and recorded US$ 90 000 in revenue through the Gateway stream since its launch in 2018.

With regards to hotel management partnerships, RTG would be looking for deals where they can earn between 10% and 50% in commissions by representing different hotels with immediate targets in South Africa, Botswana and Namibia.

“The assert-light streams (ETI, Gateway Stream and hotel partnership schemes) are all still very young and we do not want to burden those businesses, but we were talking about US$3 million from all the three businesses…

So this will be from your ETI, Gateway Stream and virtual (hotel partnership schemes). Imagine, by growing from US$11 million in foreign business from 2018 you are looking at going to about US$14 million for this year.”

In 2018, RTG’s foreign business grew 24% to US$11 million due to growth in occupancies, food and beverages from a 2017 comparative of US$8,9 million.

Total revenue for RTG increased by 27% to US$34,3 million in the period under review from a 2017 comparative of US$27 million.

The occupancy rate across RTG’s hotels was 61% with the average daily rate growing 28% to US$87.

Operating expenses grew 19,11% to US$17,17 million in 2018 due largely to refurbishments of RTG’s hotels from a 2017 comparative of US$14,42 million.

Total assets grew to a near US$56,8 million for the 2018 period due to an increase in property and equipment from US$45,7 million in 2017.

 

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