ZIMBABWE: Mutare Hotel Surviving In Tough Environment

WHILE several companies have folded due to the harsh economic environment, the Golden Peacock Villa Hotel is flourishing since it opened its doors for business in 2012. Zimbabwe Independent business writer Taurai Mangudhla (TM) last week spoke to Golden Peacock food and beverage manager Willard Madhombiro (WM) on the company's operations and future prospects. The hotel is a partnership between Chinese investors and the Zimbabwe Defence Forces. Below are excerpts:

Golden Peacock food and beverages manager Willard Madhombiro

TM: Your hotel was built in a town where there are a number of bigger and established players, how is it managing in terms of competition and perhaps in terms of occupancies?

WM: This hotel is four to five years old, we opened in 2012. Basically things are difficult for a new product, but we were aware of this. So, we had a huge marketing budget and this changed things. One year down the line, we became one of the major hotels in Mutare.

When we started people who used to go to our major competitors started coming to test our product and it wasn't very difficult to impress them given some of the competitors had relaxed and did not modernise their product.

People who wanted to test the product came through and eventually the room occupancy went up.

TM: Where are you sitting in terms of room occupancy and how are you performing compared to competition and local averages?

WM: Since we started, maybe from the second year going onwards, we are around 45% to 60% and you rarely get that in the hospitality industry. Business is low and if you do 40% average occupancy, you are doing well, so our occupancy is generally picking up. Even if you check now, we are around 68% so in terms of volumes we are getting the volumes that we want, but the challenge is most of the business we are getting even up to now is actually tailor-made.

You probably need to check the budget of the particular entity in terms of how much they are able to spend so that you align yourself accordingly because if you look at the service industry there is an element of perishability.

TM: Can you expand a bit more on the element of perishability?

WM: Let me give you an example, if you do not sell a room today it represents lost revenue, so you have to do something to make sure that you sell it. As a result, we have been tailor-making packages for groups and individuals as well. This is obviously depending on the number of room nights you are getting from an organisation. We also try to lower the rates as much as possible.

TM: What is your performance in terms of room nights?

WM: When you look room at occupancy levels, you get the picture of room nights so when we say we are doing 45% to 60% it means we are actually doing very well compared to competition and obtaining levels in the local market. In general, I would say we are performing very well. Sometimes we are fully booked and have to send some guests to nearby hotels because of the room capacity, we have 83 rooms. We even end up feeding the smaller hotels and some of them have had to up their game so that we refer business to them which is a good thing for the industry.

TM: What is the mix between conference and leisure business?

WM: We are a business hotel and what we do mostly is conferences. The majority of clients are basically conference clients. For example, we get a lot of business from the Ministry of Health supported by a lot of donors and the rest of government in general.

TM: What has been the contribution in terms of revenue between leisure and conferencing?

WM: It's skewed towards conferencing and when you combine the two, the challenge is leisure is low and conference rates are depressed.With conferences, you do negotiate a lot because of the numbers and room nights so one may say I am giving you 100 room nights and they negotiate to a point you reduce because you appreciate the numbers. For example the normal rate for leisure is US$120 per standard room, which has two beds and for the same during conferences you can negotiate up to US$85 per room because you can make your money elsewhere during the conference.

In terms of business, leisure is very low and when you then mix the two the rates go down so that's a big challenge we are facing. But what is important is we are doing everything to ensure we stay afloat. That's what we are doing now, it's a strategy we adopted to say if a client does not have US$120 we don't have to turn them away. We adjust and suit their budgets for as long as it remains profitable and sustainable for us.

TM: One might argue thatyou got significant business from diamond mines and the recent troubles there spell doom for your business, what is your view?

WM: That is a perception and not reality because from diamonds in terms of Chiadzwa we never used to accommodate a lot of people. Some of them used to fly straight to Chiadzwa and back to Harare while others have guest houses at the mines or some accommodation in the city so it wasn't as much as people say. We only witnessed high volumes of business from diamond miners perhaps it in the first year, but later on it just changed in terms of people sleeping here. What we know is that a lot of locals who worked for diamond companies, made money and they would come and spend it here at times even taking over the whole bar. People used to have a lot of money to spend but nowadays it's a different story.

TM: What is the mix in terms of domestic and foreign guest at your hotel?

WM: If you look at Mutare, it used to rely mostly on clients coming from South Africa and probably part of Mozambique, but now the rand has depreciated and that means we have become a very expensive destination. Now in terms of how many foreigners I could say, the volumes are very low. We don't get a lot of contribution from foreigners except once in a while from embassies, for example, Mozambican and Angolan but we want a lot of foreign business because we want to grow our market. Foreigners also tend to spend more, they come and benefit everyone.

Of course, we have been encouraged to review our rates so that we capture the regional market. We have also been encouraged to reduce and attract the domestic market, but because of the cost of production, you can only reduce to a certain rate.