LISTED hospitality group African Sun Limited (Afrisun) says it plans to establish five new hotels in the near future.
The hotelier said the move is part of strategies to unlock shareholder value.
“We have five sites that we are looking for in Zimbabwe,” said the group’s chief executive Shingi Munyeza.
He told businessdaily that they targeted four in Harare and another one in Bulawayo.
“These will be mainly mixed use developments because we believe we have to do away with a stand-alone hotel model but mix with other amenities,” Munyeza said.
He said the group was “still at the initial stages so we haven’t figured out how much we need to invest but we are going to find somebody to do the job (property development).”
This comes as Afrisun intends to spend nearly $14 million on refurbishing its existing hotel facilities by September this year.
Meanwhile, during the half year to March 31, 2013, the group’s earnings before interest, tax, depreciation and amortisation (Ebitda) increased by 65 percent to $3,6 million from $2,2 million registered in prior comparable period, largely driven lower operating expenses which went down four percent.
Cash generation improved from $580 000 to $3,13 million though the improved performance was diluted by increase in finance charges.
This resulted in a slump in net profit to $1,23 million from $1,5 million realised in the prior comparable period.
Revenues marginally increased by 1,6 percent from $26,2 million to $26,6 million.
“The marginal growth was attributable to a six percent growth in average daily rate (ADR), on the back of a reduction in total room nights by six percent from the same period last year. The drop in occupancy resulted in a five percent slump in revenue per available room (RevPAR) to $44 from $46 achieved during the same period last year,” said Munyeza.
“The profitability was not derived much from the revenues but was largely as a result of aggressive costs alignment.”
Munyeza pointed out that profitability would have been higher had it not been high capital and borrowing costs.
“Interest expense increased by 84 percent from the same period last year to close at $1,55 million following an increase in short-term loans and the average cost of borrowing,” he said.
However, business is expected to rebound on the domestic market as the hospitality industry approaches its peak period.
Munyeza said management intended to lower the cost of debt, currently at $16 million, from 16 percent to below 10 percent before year-end.
“This will be done though a balance sheet restructuring,” he said.
Munyeza highlighted that all their three hotels in Victoria Falls were 90 percent booked during the week of the United Nations World Tourism Organisation (UNWTO) General Assembly to be co-hosted by Zimbabwe and Zambia in August,in Victoria Falls.