African Sun seeks 12% increase in seats

African Sun seeks 12% increase in seats
Published: 09 July 2014
AFRICAN Sun says a 12 percent increase in seats is required to satisfy demand for room nights in peak periods in Victoria Falls hotels as this would help the hospitality group overturn a negative four percent in revenue for the first half of this year.

Group chief executive officer Dr Shingi Munyeza said 13 381 seats are required to satisfy demand and this will help generate more revenues for the group.

Dr Munyeza said total seats available monthly are 12 040 while total bed nights available monthly are 42 056 but there is potential to create more rooms.

Notable international arrivals growth trends from last year showed that Zimbabwe was 10 percent down while Italy and German were 11 percent up and Japan was 34 percent.

However, decline in international arrivals were recorded from US - one percent, France - 17 percent and China 36 percent.

"Our in-system booking to end of September shows a positive growth of five percent on all source markets," said Dr Munyeza.

He said revenues for June increased nine percent on previous year. The hospitality group's revenue including Ghana's Amber Accra Ghana increased by 22 percent in June and this has given hope that performance could rise by up to 15 percent to September this year.

"Recovery from the first half position will be driven by, service excellence, optimising efficiencies in Ghana operation, further cost reductions which will be five percent lower than previous year, resilient foreign market - expected to drive recovery in resort hotels and improve the group's ADR and superior performance of the Victoria falls properties up to September," said Mr Munyeza.

On debt restructuring, ASL targets debt reduction of $10,33 million structured as $5,83 million from the disposal of investment in Dawn, $4,5 million other initiatives and a possible capital call.

New capital structure is expected to improve ability to self fund future capital expenditure - targeting 40 percent of EBITDA reinvestment.

Hotel occupancies for the first half stand at 44 percent for Crowne Plaza Monomotapa, 51 percent -Holiday Inn Harare, 53 percent - Holiday Inn Bulawayo, 58 -Amber Hotel Mutare, 32 -Beitbrige Express Hotel, 57 -Troutbeck Inn Resort, to name a few.

City hotels are showing revenue per available room growth of 40 percent from March 2014 while resort hotels are showing a RevPAR growth of 56 percent from March 2014.

Elephant Hills is set to recover loss by year end and register growth by 5 percent while Amber Accra Ghana will be profitable from June and is expected to reverse earnings before interest, taxes, depreciation, and amortisation loss by end of year.

Dr Munyeza said ASL will not borrow going forward but will use 40 percent of EBITDA towards refurbishments.

He said the Ghana hotel will contribute 12 percent to the group's revenues in the next four months.

So far the group has saved $500 000 or 3 percent and is targeting savings of up to 5 percent.

ASL revenue was down 4 percent to $25,33 million for the first half from $26,44 million for the same period last year.

The group is targeting 10 percent monthly in the second half with June recording nine percent on prior year.

The positive growth is expected to be as a result of further cost reductions which will be five percent lower than previous year. A resilient foreign market will also help performance in the second half, according to Dr Munyeza.
- The Herald


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