HARARE – Listed hotelier Rainbow Tourism Group (RTG) has grown its revenues by $1 million in the four months to April 2016 due to strong performance.
RTG chief executive Tendai Madziwanyika yesterday told shareholders at the company’s annual general meeting (AGM) in the capital that the hospitality group reduced its costs by $1,3 million in the period under review.
This comes as the hotel group has reduced its operating costs by $5 million in the past three years.
“Occupancy grew to 48 percent from 38 percent recorded in 2015 while market share increased to 32 percent compared to 27 percent recorded during prior year,” Madziwanyika said, adding that RTG’s revenue generation programmes will remain the driving force for growth in the domestic and foreign markets.
“While Zimbabwe hotels registered strong performance, Rainbow Hotel Mozambique revenues were down by 46 percent in comparison to same period in 2015,” he said, adding that the unit had continuously recorded declining revenues year on year.
“The subdued performance is attributable to the current political instability in Mozambique,” Madziwanyika added.
Despite the current liquidity crisis being experienced in the country, Madziwanyika noted that RTG was now focused on rebuilding its balance sheet to create a sustainable capital structure which will be key to the completion of its turnaround strategy.
Meanwhile, the hotelier’s shareholder and businessman Nicholas van Hoogstraten caused a stir at the AGM after it emerged that the group had proceeded to restructure a $13,6 million loan from fellow shareholder National Social Security Authority (Nssa) under “questionable procedures”
In a statement attached to its full year results to December 2015, RTG chairman John Chikura announced the hotelier had restructured the Nssa credit facility into a seven-year loan at an interest rate of six percent per annum.
The funds had become current at the end of 2015, with Chikura stating that the restructuring afforded RTG capacity to service its debt and invest in its properties.
However, Van Hoogstraten alleged the process had been done in a “manner that violated many corporate governance stipulations” arguing the board that had voted for the restructuring had composition of Nssa workers presenting a conflict of interest.
“When I was shown the first term sheet, which I was unhappy with, I expressed my views. While we cannot air our laundry in public, I have been told to express my views.
“I will say this now, this arrangement was not done properly. I have a problem with the way the matter was handled especially considering some of the people who voted for this restructuring are with Nssa,” the businessman said.
This comes as the auditor general, Mildred Chiri, last year queried two transactions involving a total of $14,4 million between the Nssa and RTG, after it became apparent the social security fund was releasing money to a firm that was virtually insolvent.
Nssa — a critical shareholder in RTG — has caught flack over its investment choices in the past.