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RTG returns to profitability

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ZIMBABWE Stock Exchange-listed hotel concern Rainbow Tourism Group (RTG) has returned to profitability for the first time since the introduction of the multi-currencies after reporting an after-tax profit of $105 000 for the six months to June 30, driven by cost-cutting measures.

Report by Business Reporter

The company recorded a $3,2 million loss during the same period last year.

Addressing an analyst briefing yesterday, RTG chief executive officer Tendai Madziwanyika said the group implemented a cocktail of measures to cut down costs as revenue marginally rose.

“We have turned the corner and we hope to reduce the cost of capital to 7% from 11% by year end, while occupancy rate should be 50% by year end,” he said.

He said Earning Before Interest Depreciation Tax Amortisation (EBIDTA) went up by 982% to $1,644 million from $158 000 in June 2012 due to cost reduction.

“EBIDTA was great. We double it to $3,2 million in the second half of the year,” Madziwanyika said.

Madziwanyika said the company managed, in the six-month period, to reduce water costs to $102 000 from $282 000, while electricity costs were reduced by 13% due to the use of gas in the group’s kitchens.

“Overall costs were reduced by 12%. We embarked on centralised procurement and we cut costs by $184 720 and we also centralised the sales functions for the group,” he said.

The cost of sales was reduced by 3% to $1,3 million from $1,4 million.

Revenue for the group went up by 4% to $13,2 million from $12,7 million.

RTG, according to Madziwanyika, reduced telephone bills by 18% to $34 000 due to the use of Skype and VoIP.

Interest costs for the group went down 47% to $851 000 from $1,6 million during the same period last year.

Revenue Per Available Room (RevPar) increased to $36, while market share increased to 27% during the period under review from 23% recorded during the same comparative period last year.

Madziwanyika said the group’s occupancy rate was up 10% to 43% and Zimbabwe was leading the growth in occupancies compared to Mozambique.

“In Mozambique, we were the only hotel in town and now we have competition. Three new hotels have opened in our area. We had not invested much in Mozambique. We now have direct sales in Maputo and that will work in our favour,” he said.

Commenting on the group’s recently-launched product, RTG virtual, the group chief executive officer said the company received 10%-15% commission from this platform.

He said the group generated $24 000 through commissions during the first month of the launch.

The RTG boss said commission is expected to rise to $100 000 over the next 12 months.

RTG Virtual is a platform of 20 hotels that are linked to RTG and uses its commercial services to market their products.

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