African Sun laments short forex liquidation period

BY MISHMA CHAKANYUKA

AFRICAN Sun Limited says it is working on refurbishment programmes for most of its hotels at an estimated cost of US$25 million, as a way of revamping its product offering but the statutory 30-day forex liquidation period has been an albatross to progress. In a trading update for the third quarter ended September 30, 2019, company secretary, Venon Musimbe, said the ongoing renovations commenced at a slower pace as funding commitments and long-term planning were hindered by the 20% foreign currency retention and 30 days liquidation period.
“The group has taken an initiative to revamp its product offering through a number of refurbishment programmes for most of the hotels at an estimated cost of US$25 million. We have commenced the refurbishment of Troutbeck Resort, Carribea Bay Resort and Great Zimbabwe Hotel albeit at a much slower pace as funding commitments and long-term planning have been hampered by the 20% foreign currency surrender, as well as the 30 days liquidation period.,” Musimbe said. According to the central bank, the tourism sector is entitled to 80% of forex and use it within 30 days after which the money is liquidated to local currency at the prevailing rate. During the period, the group recorded a decline in both quarterly and year to date occupancy levels to 51% and 47% respectively owing to January protests and low disposable incomes which affected the local market.

“Occupancy for the third quarter closed at 51% representing a 24 percentage points decline from 75% recorded in the same quarter last year. This is represented by a 32% decline in room nights sold from 108 448 reported in the comparable quarter last year to 73 929 this year,” Musimbe said.

“For the nine months year-to-date, occupancy closed at 47% representing an 11percentage points decline from 58% recorded in the same nine month period last year due to reasons aforementioned. This decline represents a 19% drop in room nights sold to 206 454 from 253 661 reported in the same period last year.”

“The decline was across all our markets, with domestic and export room nights reducing by 20% and 26% respectively. The local market was negatively affected by the January protests and low disposable incomes.” The group expects the local market to remain subdued in the short to medium term due to the current challenging economic environment but will remain optimistic of its foreign source markets. Musimbe said the international market was affected by a 3% slowdown in world travel and actions of civil unrest like the Hong Kong strikes which affected arrivals at Victoria Falls destination.

The group is in the process of completing mock-up rooms for Hwange Safari Lodge and the Victoria Falls Hotel, which are expected to be officially opened in the first quarter of 2020.

The company also introduced a new product known as glamping which are high-end camp sites at Great Zimbabwe Hotel and Carribea Bay Resort which is expected to improve foreign arrivals in these places next year.

“The market is excited about this new development and we anticipate an increase in foreign arrivals at these properties as we go into 2020. An official launch of this product will be announced to the market soon, which launch will include a completed Great Zimbabwe Hotel refurbishment,” Musimbe said.

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