Rainbow Tourism Group to use 100% forex retention on capex
By Tatira Zwinoira | NewsDay |
Hospitality firm, Rainbow Tourism Group (RTG) chief executive Tendai Madziwanyika says the company will use its 100% retention on foreign currency revenues to refurbish its properties.
In February, in order to support the local tourism sector that was severely and negatively affected by the COVID-19 pandemic, the central bank announced that players would be allowed to retain 100% of their foreign currency revenue.
Previously, companies that generated foreign currency revenue would only be allowed to retain 60% of their receipts, however, the tourism sector were exempted.
The government is looking to capacitate the tourism sector to pre-COVID-19 levels when it generated over US$1 billion annually, adding additional foreign currency earnings to the fiscus.
“You would have seen in the presentation that we talked about the refurbishment program, about how we refurbished the Rainbow Towers… We did 200 rooms, that was using our own reserves,” Madziwanyika told NewsDay in an interview.
“We launched a solar facility at Kadoma, the Kadoma Hotel and Conference Centre, where we have launched a 300KVA system. That system is going to address not only our own power issues, but we will be able to pump back into the national grid and we feel that is very important in terms of contributing to the national call.
“We have continued to refurbish a whole lot of our hotels. So, the first and foremost application is really for capital expansion, capital expenditure, that is the most important thing in the form of refurbishments. It does take up most of it and that is why we have to actually phase it.”
He said this money would also be used to refurbish the Harare International Conference Centre.
“That is a 4 500-seater and I can tell you that this year we aim to totally change those seats for example.
“So, we are very grateful to the Finance minister Mthuli Ncube and government for allowing us the 100% retention as it will enable us to continue with our refurbishment program,” Madziwanyika said.
With the arrival of COVID-19 in December 2019, in China, and its global spread the following year, many governments resorted to curtailing movements to stop the spread of the deadly virus.
The World Tourism Organization has reported that the total loss in tourism revenues exceeds US$2 trillion for 2020 and 2021 as a result of the restrictions.
Zimbabwe was no exception, as in 2019, tourism receipts were US$1,24 billion and after the COVID-19 pandemic spread globally the following year, the southern African nation earned US$359 million and US$397 million in 2020 and 2021 according to the Zimbabwe Tourism Authority.
Madziwanyika said the group had been relying on domestic tourism receipts.
“In our case, you will find that in the results were talking about (trading update for the first five months of the year), they were almost 100% driven by the domestic market so it shows that with the right focus on our domestic markets you can do great business,” he said.
“It makes sense to drive your own market and so we have achieved what we have done, 46% occupancy (in the first five months) which is almost pre-COVID-19 levels, without any foreigners.”
The RTG group recorded a 282% increase in revenue to $4,5 billion in the first five months of the year, up from $1,18 billion in the comparative 2021 period.
Madziwanyika, however, called on the authorities to quickly address the falling value of the Zimbabwe dollar.