eBusiness Weekly
Tawanda Musarurwa
Listed hospitality group, Rainbow Tourism Group (RTG), is extending its tentacles into tourism activities and transfers as it seeks to tap into the wider tourism value-chain.
This is in addition to its pursuance of an asset-light growth model that does not require fresh shareholder investments.
RTG chief executive Tendai Madziwanyika told Business Weekly that the group “sees the bigger picture” in respect of growing its bottom-line.
“We now have Gateway Stream, which is an app. We have the white-water rafting, which we are launching in six weeks’ time, we have Heritage, which is the umbrella body for our tour operations and through Heritage, we have six brand new buses for transfers and we have an adventure park here (Rainbow Towers Harare) so we are going to be generating revenue from activities,” he said.
“People do not travel to Africa from Europe or Asia or America to come and stay in a hotel, no matter how nice your hotel is. They come to experience the place and to conduct activities, so we believe we need to be in that space. In the tourism value-chain the hotels in Zimbabwe generally only partake of about 4 percent of the travel wallet.”
The World Tourism Organisation (UNWTO) has predicted that the global tourist arrivals to grow by 3 to 4 percent annually, to reach 1,8 billion in 2030.
Added Madziwanyika: “In other words, if someone is travelling, say, from Netherlands to here, it’s a long-haul flight and that is expensive, so these travellers typically stay for a week or two, or even three. That traveller has got transfers, regional flights, food, and activities. So you find that our three nights of Bed & Breakfast are nothing, because its US$150 B&B per night and the average stay in Zimbabwe is three nights, so its US$450 that Zimbabwe gets out of a wallet of maybe US$8 000.
“So what we are saying is that we want to participate in more of that wallet. Zimbabwe as a destination needs to improve and as operators we need to be more aggressive, so as RTG we are going into activities because activities are a sizeable portion of that wallet. That is why we have Journeys by Exotic, our company out of the United States.
“What we are doing there are packages for Americans (America is the number one travel market in the world in terms of numbers of people and in terms of spend) not only to Zimbabwe, but to the entire globe. That little outfit is beginning to generate revenues and going into 2020, we believe it is going to generate amazing revenues.”
Meanwhile, RTG posted a positive set of result for the six-months period to June 30, 2019.
Profit before tax was up 16 percent to $6,7 million, from $416 000 in the prior comparable period on the back of a 170 percent rise in revenues.
Group revenues rose to $37 million, despite business disruption in the form of the closure of Rainbow Bulawayo for
refurbishment during the period under review.
Foreign currency revenues for the period amounted to US$4,8 million, a 9 percent improvement from the US$4,4 million that was achieved in the prior comparable period, attributable to “increased foreign arrivals into resort hotels”.
Revenue per available room (RevPAR) closed at $120, was 186 percent above $42 recorded in 2018.
RTG’s occupancy for the period under review declined 10 percent from 53 percent in 2018 to 43 percent.
Gross profit margin closed at 74 percent, which was 10 percent above 67 percent in the prior comparable period as the company maintained a cost-containment strategy.
Earnings before interest, tax, depreciation and amortisation (EBITDA) grew 364 percent to $10,2 million from $2,2 million in 2018.
Finance costs for the period stood at $1,3 million, up from $574 000, attributable to “finance lease costs” following the adoption of the IFRS accounting policy.
Basic earnings per share grew to $0,22 from 0,009 cents in the prior comparable period.
