African Sun reduces loss
AFRICAN Sun Limited (ASL) reduced its loss to US$560 00 for the half year to June 30 from US$1,2 million on prior year as the group continues its drive to reduce costs and increase revenue generation.
In a statement accompanying the group’s financial results, revenue was down 20 percent to US$17,9 million from US$22,4 million last year.
The decline in revenue was attributed to a subdued trading environment with occupancies declining by seven percentage points to 37 percent from 44 percent.
The regional market suffered a 46 percent drop, weighed down by South Africa due to the depreciation of the rand against the US dollar.
“The local market also declined by 17 percent as a results of reduced conferencing and current liquidity challenges. However, the international market room nights were four percent up on last year with a strong performance coming out of The Victoria Falls Hotel,” ASL said.
The performance by the international market drove its Average Daily Rate up two percent to US$94.
The reduced occupancy however, resulted in a 15 percent decline in revenue per room from US$40 achieved in the same period last year to US$34.
Earnings Before Interest Tax Depreciation and Amortisation dropped 92 percent to US$110 000 million, from US$1,41 million last year as a result of reduced revenue.
The company said the repayment and continuous restructuring of expensive loans resulted in savings of 39 percent in finance costs from US$1,21 million last year to US$740,000.
ASL said its operating expenses were 14 percent lower at US$13,3 million compared to US$15,6 million due to cost reduction initiatives and changes in the business model.
Going forward, ASL said management will continue to focus on revenue generation and cost reduction initiatives to navigate the current challenging business environment to complement the expected peak season surge in business.
“As we enter the peak season, conferencing and international market business is expected to bolster performance, particularly in our Victoria Falls properties…The expansion of the Victoria Falls airport and runway to accommodate larger aircrafts is likely to increase foreign arrivals,” said ASL.
However, the real direct benefit of ASL’s business may only be realised beyond the current financial year. Improved airline connectivity between Harare and Victoria Falls will influence domestic arrivals into these two destinations.
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