Lockdown could cost RTG 6pc of annual revenue

10 Apr, 2020 - 00:04 0 Views
Lockdown could cost RTG 6pc of annual revenue

eBusiness Weekly

Business Writer
Zimbabwe Stock Exchange-listed Rainbow Tourism Group Limited (RTG) could lose a potential 6 percent of its total annual revenues during the 21-day lockdown ordered by Government effective from 30 March 2020.

In its 2019 financial year, RTG’s inflation adjusted revenue stood at $454,6 million.

Following the Public Health (COVID-19 Prevention, Containment and Treatment) (National Lockdown) Order, 2020, the hotel group temporarily closed down all of its hotels for the duration of the lockdown period.

The closure will, however, have a significant impact on the Group’s month of April 2020 revenues which traditionally accounts for 6 percent of the total annual revenues, according to a statement accompanying the group’s financial results for the year ended December 31, 2019.

Globally, the tourism sector is one of the hardest hit as the Covid-19 pandemic has forced airlines, one of the biggest enablers for the sector, to stop operating.

Several countries across the globe have also imposed travel restrictions on citizens even within their borders resulting in a temporary collapse of the tourism sector.

According to the World Tourism Organisation report published towards the end of March, international tourism arrivals could decline by 20 to 30 percent in 2020.

The world tourism body said this will translate into a loss of US$300 to US$450 billion in international tourism receipts almost one third of the US$1,5 trillion generated globally in the worst-case scenario.

In Africa, Zimbabwe was ranked in the top five tourist destinations in the continent with at least 2,57 million visitors having been recorded.

The total impact of Covid-19, which is yet to be quantified will obviously leave a serious dent on the operations and financials of RTG.

This comes at a time the Hotel Group was already struggling, with occupancy levels having dropped to 47 percent from 61 percent for the 2019 financial year.

However, on a like-for-like basis occupancy closed at 51 percent above the national average occupancies of 41 percent reported by the Zimbabwe Tourisms Authority (ZTA Q3 2019 report).

Revenue generated from international arrivals was up by just one percent to US$11,2 million from US$11,1 million prior year comparative.

Experts say it will take a while before international travel and tourism returns to normal and as a result RTG will have to bank on domestic tourism where it was already putting in place revenue generating initiatives.

On the domestic market, the Group broadened tourism value chain to not only focus on hotels by successfully setting up Heritage Expeditions (Private) Limited, a wholly owned local tour operations and activities entity.

“The company has already commenced transfer tours, quad bike safaris, white water rafting, and packaging of third-party activities as well as invested in an adventure park at the Rainbow Towers Hotel in Harare.”

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