RTG exits Mozambique market
RAINBOW Tourism Group (RTG) has set sights on maintaining a revenue growth momentum by focusing on foreign business while maintaining its share of domestic market, the chairman John Chikura has said.
In its unaudited financial results for the half year ended June 30, 2016, the hospitality group expressed hope that the second half of the year, which traditionally contributed 60 percent of its annual business over the past years, would yield good results.
“To achieve this, we will continue to introduce exciting revenue generating programmes to the local market. On the international stage, the group is opening new markets as well as consolidating the revenue streams from existing source markets,” he said.
During the period under review, the hotel group recorded a turnover growth of four percent to $11,8 million from $11,3 million recorded in 2015.
“During the first four months of 2016, revenue growth was significant but it decelerated in May and June due to exogenous factors, which impacted the business,” he said.
Mr Chikura said the challenging market environment has resulted in the group sharpening its focus on cost reduction.
As a result of the impact of discontinued operations, he said the group posted a loss of $3 million during the period under review compared to a loss of $1,9 million recorded during the corresponding period last year.
The hospitality group terminated the lease agreement on Rainbow Beitbridge Hotel with the National Social Security Authority on May 31, 2016, said Mr Chikura, adding that the decision was necessary to arrest further losses.
“The loss from discontinued operations ($1,6 million) includes loss on exit from Rainbow Beitbridge Hotel of $600 000 and an impairment charge of $500 000 for Rainbow Hotel Mozambique assets.
“At half year, the total debt reduced to $18,2 million from $19,4 million as at December 31, 2015.”
He said the board has also resolved to exit Rainbow Hotel Mozambique effective September 30, 2016 due to declining performance as a result of political instability in that country as well as cut backs in government spending and resultant exchange rate translation losses.
“In the 18 months to June 2016, the Metical has depreciated significantly against the US dollar. We believe this to be the right time to exit the Mozambique market and cushion the group from a worse position,” he said. — @okazunga