Zimbabwe News and Internet Radio

Booking cancellations cost African Sun US$4,2m

By Oliver Kazunga

Hospitality group, African Sun Limited has lost US$4,2 million from the cancellation of 14 512 bookings as at March this year due to the outbreak of Covid-19 pandemic.

File picture of Crowne Plaza (Monomotapa) Hotel in Harare
File picture of Crowne Plaza (Monomotapa) Hotel in Harare

The deadly infectious disease was first detected in China last December and has rapidly spread across the world forcing countries to implement travel restrictions.

The pandemic which has forced the hotel group to temporarily close down 11 hotels and two casinos, was detected in Zimbabwe in March. In a statement accompanying financial results for the year ended December 31, 2019, African Sun Limited (ASL) said many countries around the world including Zimbabwe’s source markets have grounded their airlines and implemented travel restrictions that include quarantine as part of measures to curb the spread of the disease.

“These measures are weighing on the company’s international business outlook and as expected have resulted in the cancellations of bookings or deferrals without concrete dates.

“Our current statistics have shown that we have had 14 512 room nights cancelled, with a total revenue of US$4,2 million lost by 24 March 2020,” it said.

ASL said as the outbreak continues to evolve, it is challenging at this point to predict the full extent and duration of its business and economic impact.

“However, we expect the remainder of the first half of 2020 to be severely impacted causing a permanent dent to the 2020 financial performance.

“The second half is forecasted to have better performance as the pandemic is expected to be under control on the back of lockdowns and isolation measures,” said the hospitality concern.

Despite the potential impact of the Covid-19, ASL expects the general travel outlook in the second half of the year to be somewhat positive and hopes this should dilute the losses of the first half. “We will continue to target our sales and marketing initiatives in the second half to support and promote international and regional tourism as we anticipate the domestic market to remain subdued,” it said.

During the financial year under review, the group’s inflation adjusted revenue was $914 million, reflecting 68 percent growth from 2018 largely driven by the average daily rate.

Average daily rate grew by 102 percent from 869 recorded last year to 1 759 as the hotels continued to align room rates with the interbank exchange rate during the year. With regards to revenue earning capacity and net-unit growth goals, the hotel group during the financial year ended December 31,2019, completed two campsites at Great Zimbabwe, and Caribbea Bay Hotel with a combined capacity of 75 rooms accommodating a maximum of 150 people.

The group also launched Sun Leisure Tours (a touring division) in the first quarter of 2020, with the initial investment directed to Victoria Falls and Bulawayo.

The company is working on resourcing Harare. On termination of hotel management contract, ASL said:

“As previously reported, the hotel management contract with Legacy Hospitality Management Serves Limited (Legacy) covering five of our hotels (The Elephant Hills Resort and Conference Centre, The Kingdom at Victoria Falls, Monomotapa Hotel, Hwange Safari Lodge and Troutbeck Resort) was terminated.

“The matter is still going through legal processes and we will advise once this is completed.

“However, we wish to advise all our stakeholders that, this termination has limited impact on the group’s operations. To date, we have fully integrated and taken over the management of our hotels, with the operations now segmented.”

During 2019, the board declared two sets of interim dividends. The first interim dividend of $5,3 million being $0,0061 per share (0,61 cents per share) was declared in August 2019.

The second interim dividend of $8,6 million being $0, 01 per share (1 ZWL$ cents per share) was declared in January 2020.

The two dividend declarations bring the total dividend for 2019 to $13,9 million. The Chronicle