ZIMBABWE: Rainbow Tourism Group's Revenue Grows 13 Percent

Rainbow Tourism Group's revenue for the first four months of 2016 grew 13 percent to $8,6 million in comparison to $7, 6 million recorded in the prior year.

Group chief executive Tendai Madziwanyika told the company's annual general meeting last week that occupancy for the period under review grew to 48 percent from 38 percent recorded during the same period last year while market share increased to 32 percent compared to 27 percent recorded during the prior year.

"Revenue generation programmes will remain the main driving force for growth in the domestic and foreign markets," said Mr Madziwanyika.

While Zimbabwe hotels registered strong performance, Rainbow Hotel Mozambique's revenue was down 46 percent in comparison to the same period in 2015. The Hotel has continuously recorded declining revenues year on year.

"This subdued performance is attributable to the current political instability in Mozambique. We will continue to keep a close eye on the performance of this unit," said Mr Madziwanyika.

Rainbow Beitbridge Hotel was closed on March 31, 2016 following the termination of the lease agreement with the National Social Security Authority.

During the two years of operation, the RBBH recorded unsustainable losses. Market factors characterised by depressed occupancies, low margins and high costs were the major contributing factors in exiting Beitbridge.

The furniture, fittings and equipment which belonged to RTG were removed from the Beitbridge hotel and transferred to Rainbow Towers Hotel, New Ambassador Hotel and Bulawayo Rainbow Hotel allowing for the immediate refreshing and refurbishment of these hotels at no additional cash outlay.

Employees affected by the group's exit from Beitbridge have been offered alternative employment within the group.

Mr Madziwanyika said the cost reduction trend has continued in the 2016 performance. Year to date total operating costs reduced 17 percent compared to the prior year. He said the group will continue to reduce costs through the introduction of new innovative techniques to reduce costs. Over the four months the group reduced costs by $1,3 million while revenues grew by $1 million.

"It is now evident that the company is now benefiting from the cost reduction journey implemented since 2013. Over the period 2013 to 2015 total operating costs reduced by $5 million year on year.

"The operation is now leveraging on innovation to drive service excellence. This process will include establishment of self checking systems through the creation of quality circles and job re-engineering by re-defining roles through job enlargement and job enrichment. This approach will enable more efficient processes throughout the company," said Mr Madzivanyika.

During the past three years the company has reduced the working capital gap by $3,2 million from $12,4 million to $9,2 million.

Operationally the business managed to generate an average EBITDA of $4 million which has been channelled towards refurbishment of the hotels and loan servicing.

Mr Madziwanyika said the company's financial position remains burdened by the balance sheet structure and is expecting to have a lasting solution during the course of the year. He said the company is now focusing on rebuilding the balance sheet to create a sustainable capital structure which will be key to the completion of the turnaround journey.