ASL bleeds as Covid blazes
AFRICAN Sun Limited (ASL) has given a full illustration of Covid-19’s wrath on hotels, with financial results for the year ended December 31, 2020 showing plummeting occupancies and revenues as the scourge spilled out of control.
ASL chairperson Alex Makamure acknowledged the extent of the obstacles that confronted the tourism industry, describing the pandemic as the most profound headwind to rattle Zimbabwe’s largest leisure chain.
The bad news is, tourism cannot be completely certain about the outlook either, as the pandemic has been relentless in the last few months with scores of governments reverting back to hard lockdowns following a deadly resurgence that has kept terrified travel markets volatile.
Makamure said occupancy rates fell to 23% during the review period, from 48% in 2019, as room nights slipped by 52%.
When hotels struggle to attract clients the endgame is a slowdown in income — ASL’s inflation adjusted revenue tumbled 55% to ZWL$1,84 billion (about US$21 million) from ZWL$ 4,10 billion (about US$47 million) in 2019.
The group reported a ZW$1,5 billion (about US$18 million) loss after tax , from
ZWL$839 million (about US$10 million) profit in 2019.
This was in line with most analyst predictions that had tipped the markets to prepare for a bloodbath across the industry after the pandemic forced hotels to shut down and send staff home to prevent contagion as the invasive virus grounded the global economy.
The African Development Bank said last month that tourism-dependent southern African economies took the sharpest knocks of lockdowns implemented by governments during the period, while Zimbabwe Tourism Authority data showed the industry lost US$1 billion as arrivals plummeted 90%, the sharpest slowdown in four decades.
“Covid-19 represents the most significant challenge that our industry has ever faced,” Makamure said.
His response was shaking up cost structures and reviewing deployments towards capital expenditure in line with the shocks that escalated when the world expected a quick end.
“At the onset of Covid-19 induced lockdowns, we moved swiftly to rightsize our business in response to the precipitous decline in revenue by rebasing our cost structure, strengthening our balance sheet, and lowering capital spending,” he said.
“Notwithstanding management’s cost containment initiatives, the 2020 results reflect the significant reduction of economic and social activity due to the Covid-19 induced lockdowns, as well as the temporary suspension of operations at all our 11 hotels and two casinos at some point during the year. After a marked reduction in new infections during third quarter and fourth quarter 2020, we unfortunately experienced a significant resurgence in the Covid-19 cases at the beginning of 2021. Governments world over, including Zimbabwe, reintroduced partial or complete lockdowns in a bid to control the Covid-19 second wave. The group expects this resurgence to negatively impact domestic business in the short-term and international business at least into the medium term,” Makamure said.
“As we look to the year ahead, we remain optimistic that the accelerating Covid-19 vaccination programmes will lead to further relaxing of restrictions and unlocking leisure and business travel. There are prospects of a rebound in the later part of 2021 on the back of the current rollout of the Covid-19 vaccines and attaining of the required herd immunity,” he said.