African Sun sees new dawn in travel recovery
Hospitality group, African Sun Limited is pinning hopes of better performance on international travel recovery, with the first quarter to March 31, 2024 performance already showing improvements in occupancy levels, compared to the same period last year.
This comes as the United Nations World Tourism Organisation (UNWTO) has projected an increase in international travel this year, which will benefit tourism and hospitality organisations.
International travel was affected by travel bans that were effected during the Covid 19 pandemic period, resulting in some operators temporarily closing their facilities, which weighed on their financial and volume performances. However, the sector is beginning to see recovery.
"We expect to see continuing improvements in our business, driven by the recovery of the international market which had been lagging since the waning of the pandemic," said the group in a trading update for the quarter under review.
On the domestic scene, the group is confident the policy measures the Government is implementing will help restore confidence in the economy, which will also cascade to the tourism and hospitality industry.
Worth mentioning is the introduction of a new currency, Zimbabwean Gold (ZiG), at the beginning of the second quarter, which sparked a renewed sense of optimism, as it aimed to foster stability in prices and exchange rates by instilling market confidence.
However, there are still concerns as access to foreign currency through formal channels remains a challenge, "particularly given the suspension of the Auction System following the introduction of the new currency."
African Sun's revenue for the quarter stood at US$11,1 million, which was 40 percent ahead of the prior year, largely driven by higher demand for conferences during the quarter, resulting in an 8-percentage-point increase in occupancy and a firmer Average Daily Rate (ADR).
During the quarter under review, the domestic market continued to be the primary source of business, contributing 76 percent of the total room nights sold, while the international market is gradually recovering, contributing 24 percent of room nights, a 54 percent growth from the same period last year.
"The increase in ADR and occupancy results from ongoing product improvements and revenue-yielding efforts," said the group.
On profitability, the group recorded an EBITDA of US$0,26 million, an improvement from an EBITDA loss of US$0,41 million recorded in the same period last year.
The group's loss before tax was US$1,27 million from US$1,85 million in the comparable period, an improvement of 32 percent. The enhanced profitability is mainly attributable to growth in revenues as indicated above. The Victoria Falls Stock Exchange (VFEX) listed group maintained its strong liquidity position, with a cash and cash equivalents balance of US$8,6 million at the end of the quarter.
"Furthermore, the group remains debt-free. However, due to the need to refurbish and modernise our hotel product portfolio, the group is seeking suitable debt funding opportunities in the local and regional markets," said African Sun.
The group declared a final dividend of US$350 000 for the 2023 financial year, following the end of the first quarter.
