HomeNewsRTG sees 2% first half-year marginal revenue growth

RTG sees 2% first half-year marginal revenue growth

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RAINBOW Tourism Group (RTG) saw its revenue growing by 2% to $13,5 million in the half year ended June 30 2014 from $13,2 million spurred by creativity in revenue generation, an executive has said.

NDAMU SANDU
CHIEF BUSINESS REPORTER

The group’s chief executive officer Tendai Madziwanyika said unlike last year in which the group hosted conferences such as the Committee of Intelligence and Security Services of Africa (CISSA) meeting and the referendum bookings for the July 31 elections, there were no such meetings in the first half of the year.

“We acquired business worth $2,5 million to replace once-off major conferences that took place in the first half of 2013 [CISSA, referendum and elections],” he said.

“This time we had no special conference. It was normal business and we are excited about that.”

Madziwanyika said going forward “creativity is going to be the name of the game”.

“We have emphasised on cost reduction. We have also been creative in revenue generation,” Madziwanyika said.

New revenue streams include the Stay Now and Pay Later product launched late last year. In the first half of the year, the product raked in $52 107 up from $11 511 in full year 2013.

RTG Virtual had gross revenue of $456 000 during the period under review up from $119 000 in full year 2013.

RTG mobile’s contribution to revenue was $131 151 in the first half of the year.

Madziwanyika said e-commerce contribution to revenue grew to $380 227 in the first half of the year from $248 264 in the same period last year.

He said the South African office had been rejuvenated with revenue contribution growing by 52% to $850 000 from $560 000 in the comparable period.

Madziwanyika said the RTG system was now geared to absorb most of the economic pressures and fiscal pronouncements as a result of cost reduction strategies that commenced in 2012.

To date the group has retrenched eight head office staff at a cost of $130 000.

It has also retrenched 60 employees at Rainbow Towers in August at a cost of $600 000.

He said the group had also undergone business process re-engineering, resulting in the centralisation of key functions such as accounts, sales and procurement departments.

Madziwanyika said the group has also exceeded its target of reducing procurement costs of 90% of total goods.
The target in the first half was 10% equivalent to $300 000. In the period under review, RTG managed to reduce the procurement costs by $223 000.

“The $223 000 was achieved during the first half which is a softer period. We will procure more in the second half and be able to beat our target of
$550 000,” he said.

He said the group was working on reducing its interest burden to 9% by year end from the current 11% and was in negotiations to restructure long term loans at low interest rate.

RTG saw its revenue per available room decreasing by 11% to $32 from $36 in the same period last year due to the newly-opened Rainbow Beitbridge Hotel which entered the market with a penetration price of $49 per night.

Profit after tax at $139 000 was 32% up from the same period last year despite the fact that RTG undertook some retrenchment exercises in the half year to June 30 2014.

Earnings before interest, taxation, deductions and amortisation (EBIDTA) margin was $1,5 million in the first half from $1,6 million in the comparable period last year.

The group said it was a result of the newly opened Rainbow Beitbridge Hotel which posted a negative EBIDTA of $350 000 as a result of high start-up costs and low revenue, typical of new hotels.

The EBIDTA measure is also of interest to a company’s creditors since it is essentially the income that a company has free for interest payments.

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