AfricaBusiness & FinanceZimbabwe

African Sun occupancies decline 19% in first 5 months due to Covid-19

By Almot Maqolo

African Sun reported a 19 percent decline in occupancy in the first 5 months of 2020 weighed down by the impact of Covid-19 related closure of hotels. However, in the first quarter to March occupancy was ‘pleasing’, closing at 40 percent, 2 percentage points up on last year’s corresponding period.

“However, occupancy for the 5 months ended May 2020 dropped to 24 percent, down by 19 percentage points compared to 43 percent recorded for the same period last year,” the company said in a trading update. “This was largely due to Covid-19 induced lockdowns, as hotels recorded unprecedented occupancies of zero percent and 2 percent in April 2020 and May 2020 respectively.”

Inflation adjusted revenue for the 5 months stood at ZWL$316.36 million and was 45 percent below budget largely due to the impact of Covid-19. Of the total revenue, domestic and foreign markets contributed 59 percent and 41 percent respectively.

Average Daily Rate for the 5 months was an effective US$111, which is 12 percent higher than US$99 reported same period last year – mainly a rate parity issue. Volumes for the domestic market was down owing to the depressed economic environment.

“Local aggregate demand on the decline as most companies are still operating below the pre Covid-19 levels, affecting business from the local market – room nights from domestic market down 43 percent from same period last year, and expected to worsen,” the hotelier said.

Lack of inter-city and provincial travel has resulted in no local leisure travelers forcing some of the group’s hotels to remain closed. Overheads to turnover ratio was 78 percent compared to 51 percent in the same period last year due to impact of suppressed revenues. Earnings Before Interest Tax Depreciation and Amortisation margin declined 2 percent compared to 38 in the same period last year.

After the relaxation of lockdown measures, the group opened 4 hotels under phase one on 11 May 2020. “Occupancy started low in the first two weeks of re-opening, but it is pleasing to note that these have since grown to above breakeven point,” it said. Later, the group opened the fifth hotel under phase two on 1 July 2020. Business is currently generated from corporates, government and non-governmental organisations with reduced individual and leisure business.

In the outlook, the group said it will continue to review the situation and open more hotels as and when the situation improves, particularly its Victoria Falls properties which depend on air access and intercity. However, the growth trajectory and volumes rebuilding phase is likely to be “flatter” due to lockdowns, and low disposable incomes

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