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African Sun hints at protracted headwinds

BY SHAME MAKOSHORI

HOSPITALITY giant African Sun Limited (ASL) says occupancy levels plummeted by frightening margins during the first quarter, with the big leisure chain taking a full hit from the global health crisis brought about by the Covid-19 pandemic.

In a trading update, company secretary Venon Musimbe said occupancies fell to 14% during the period, a 26 percentage point slowdown from 40% during the same period last year.

At the centre of the huge fall was January’s second hard lockdown announced by President Emmerson Mnangagwa’s administration that further restricted intercity travel and compounded a year- long global travel embargo, which closed international tourism.

While 2020’s first quarter was unaffected by the pandemic, ASL’s review gave the market a glimpse of the impact of last year’s turbulences.

But even blanket lockdowns having been relaxed in most markets, ASL projected that Covid–19 would continue to have a bearing on tourism trends for at least two years.

“The group recorded occupancy of 14% for the three months ended 31 March 2021 representing a 26 percentage points decline compared to 40% that was recorded during the same period last year (SPLY), noting that SPLY was before the onset of lockdowns,” Musimbe said.

“Inflation-adjusted revenue for Q1 (first quarter) was down 64% at $279,52 million against $784,82 million achieved SPLY. The group expects Covid-19 to continue affecting operations at least in the short to medium term. We are hopeful that the vaccination programmes being implemented across the world will slow down the pandemic and allow international travel to restart. The group’s steady recovery recorded in the last quarter of 2020, suffered further setbacks at the beginning of 2021,” said ASL.

ASL’s financial position improved during the period after the value of property and equipment increased by $5,54 billion after the consolidation of Dawn Properties Limited, following a mega transaction last year.

“The group closed Q1 with cash and cash equivalents of $737,23 million, an 8% decline from $799,37 million reported on 31 December 2020. The group has two undrawn facilities amounting to $318 million which will be utilised should the need arise,’ Musimbe noted.

ASL operates some of southern Africa’s best hotels, including Elephant Hills Resort in Victoria Falls and Great Zimbabwe Hotel in Masvingo.

But declining occupancies were felt across the industry.

Occupancy levels also slowed at Rainbow Tourism Group (RTG), which also reported first quarter earnings last week.

RTG said the rate declined to 12% during the review period, from 33% last year.

But the country’s second largest leisure chain said it was confident of a rebound as airlines return.

Africa’s tourism sector was the worst affected by the Covid-19 outbreak as governments directed international and regional airlines to park planes and send staff home to help the globe fight the contagious disease.

However, in the past few months, the world has been slowly opening up international travel with airlines allowed to fly under strict Covid-19 guidelines.

Last month, regional carrier Airlink said it had reviewed its strategy on the Harare-Cape Town route following a marked boom in demand, while British Airways Compair said at the weekend it was reintroducing frequencies into Zimbabwe starting this month.

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