Political, Economic Instability Weighs Down African Sun Operations

The violent political upheaval that rocked the country in January and a generally deteriorating economic environment spelt negative performance for hotelier, African Sun Limited which endured a decline in hotel room bookings, the company’s nine months to September 30 trading period update suggests.

For the nine months year-to-date, occupancy closed at 47 percent representing an 11 percentage points decline from 58 percent recorded in the same nine month period last year.

This decline represents a 19 percent drop in room nights sold to 206,454 from 253,661 reported in the same period last year.

“The first quarter was significantly impacted by violent demonstrations, and stay-aways which resulted in cancelled bookings from both the domestic and international market,”

“The decline was across all our markets, with domestic and export room nights reducing by 20 percent and 26 percent respectively. The local market was negatively affected by the January protests and low disposable incomes. Of concern are clear indications that we are in a recession,” company secretary, Venon Musimbe said.

In January, a national shut down organized by a pro-workers union, Zimbabwe Congress of Trade Unions (ZCTU) turned violent, bringing the country into a halt after an announcement of a steep increase in fuel price by President Emmerson Mnangagwa.

The country was put into martial law for over a week coupled with countrywide internet shutdown.

Massive economic losses were recorded and more so for the tourism sector.

However, a tough economic environment worsened matters for African Sun business as inflation affected disposable incomes from the local market.

Occupancy for the third quarter closed at 51 percent representing a 24-percentage points decline from 75 percent recorded in the same quarter last year. This is represented by a 32 percent decline in room nights sold from 108,448 reported in the comparable quarter last year to 73,929 this year.

On the international front, bookings were also affected by a generally slower growth in world travel particularly from the political instability in Hong Kong, a major source market for the Victoria Falls destination.

“In comparison, the international market has been affected by the general slowdown in world travel by 3 percent, as well as random actions of civil unrest like the Hong Kong strikes which affected our arrivals in the Victoria Falls destination, in particular for The Kingdom at Victoria Falls,” Musimbe added.

Going into the future, the Group is revamping its product offering through a number of refurbishments at a cost estimated around US$25 million.

Refurbishment of Troutbeck Resort, Carribea Bay Resort and Great Zimbabwe Hotels have already began albeit at slower pace as funding commitments have been hampered by the 20 percent foreign currency surrender, as well as the thirty (30) days liquidation period.

The Group has also added high end Camp Sites at Great Zimbabwe Hotel and Carribea Bay Resort in the third quarter.

The African Sun group owns luxurious hotels across the country such as Troutbeck Resort, Carribea Bay, Great Zimbabwe, The Kingdom Hotel, Elephant Hills Resort, Holiday Inn hotels, Monomotapa Hotel and the Victoria falls hotel.

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