HomeNewsRTG gets first tranche from PTA Bank

RTG gets first tranche from PTA Bank

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Rainbow Tourism Group (RTG), Zimbabwe’s second largest hotel and leisure group, says it has got over the tourism disappointments of the 2010 World Cup and is looking ahead with plans to financially close outstanding capital projects after receiving a boost from Comesa’s PTA Bank.
Zimbabwe’s tourism players, from hoteliers, travel agencies, destination management companies and taxies to airlines, hoped to capture “rich pickings” from the 2010 World Cup soccer finals that took place in South Africa from June 11 to July 11. But the euphoria and illusion, which led many into recapitalisation-related borrowings, has since dissipated, and the industry has adjusted its growth prospects.
Despite the World Cup depression, both occupancies and room rates have ticked upwards, led by city hotels, signalling a modest recovery in tourism business.
Market share
RTG on Friday said it had secured the first tranche of $3,5 million from the PTA Bank out of a total loan approval of $7,5 million, which would be committed to various capex portfolios, which would help it ramp up market share. The hotelier’s target is to boost market share to 28% from the current 26%.
Main capex projects include the completion of the Beitbridge Hotel and the refurbishment of A’Zambezi River Lodge in Victoria Falls and the Rainbow Towers Hotel & Conference Centre in Harare, which was downgraded to a three-star hotel by the Zimbabwe Tourism Authority (ZTA) in 2007.
Chipo Mtasa, RTG CEO, said construction of the Beitbridge Hotel began early this month after a government thumbs-up and is projected to come on stream in 2012, adding 140 rooms to the hotelier’s total room stock.
“Civil works have been completed at Beitbridge Hotel. The foundation has been dug up and delivery is expected in 15 months,” Mtasa said.
The hotel is designed into four distinct units to make it environmental friendly. Mtasa said RTG targets completing the refurbishment of A’Zambezi River Lodge, which is being upgraded to a four-star lodge, by April next year. The refurbishment for Rainbow Towers is also expected to begin next year and $7,5 million would be committed to the project. The investment could see the hotel regaining its 5-star status, which it lost when it failed to pass a ZTA standards test.
Revenue up, loss down Paschal Changunda, RTG finance director, said first-half turnover for the hotels group increased 67% to $10,5 million, from $6,2 million during the same period last year, as both occupancies and room rates improved. As a result, the company reported a reduced operating loss of $40 000 compared to $643 000 last year. Earnings further hurt by high costs of funding operations.
Occupancies for the review period increased to 40% from 33%, driven by city hotels, notably The Rainbow Towers Hotel and Conference Centre and Bulawayo Rainbow Hotel. However, resorts in Victoria Falls closed the period under stress. The sales mix was 77% local and 23% foreign.
As at June 30, the fair value of RTG total assets amounted to $37,7 million, while networking capital was a negative $1 million due to short-term borrowings.

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