Resurgence of Covid-19 in key markets to depress international arrivals: African Sun

91% Dawn shareholders take up Afsun's buyout offer

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African Sun
African Sun

HARARE – African Sun says that international business is expected to remain subdued over the coming months due to the resurgence in Covid-19 in key source markets. This comes as the pandemic disruption will have a longer and deeper-than-forecast impact on the hotel industry particularly from key markets in Europe, the United States of America and Asia.

“We expect the resurgence to negative impact international business at least in the short to medium term,” said African Sun in its third quarter trading update.

According to the group, the second wave of infections requires continued diligence and dexterity to manage costs and preserve cash.

African Sun is however forecasting a modest uplift in domestic and regional demand in the short term. “While COVID-19 challenges persist in key markets, it is encouraging to note that, South Africa which is our tourism hub opened international travel effective 1 October 2020.”

Operationally, the group has now opened all of its hotels after the COVID-19 induced closures earlier this year.

On the domestic front, the move to allow intercity travel saw the number of room nights sold increase to 20 329 in Q3 from 8 144 in Q2 largely on the back of government and NGO business.

For the three months to September 30, 2020, occupancy decreased by 37 percentage points compared to the same period last year.

Inflation adjusted revenues for Q3 were down 78% at ZWL260.88 million against last year. While group performance for the quarter under review continued to suffer from COVID-19, key Group performance indicators in Q3 show a steady recovery
from Q2.

Occupancy improved from 5% in Q2 to 14% in Q3, largely driven by the relaxation of lockdown restrictions, together with a number of promotional initiatives by the group to improve demand. However year to date, occupancy was down 28 percentage points, compared to the prior year.

Inflation adjusted revenue for the period decreased 62% at ZWL965.3 million against the comparable year ago period. The decrease is attributed to the COVID-19 pandemic and the related reduction in global travel and tourism, which required the complete suspension of all hotel operations at some point during the nine months ended 30 September 2020.

Going forward, the group said cost containment initiatives adopted in Q2 and Q3 are expected to drive our cash preservation mode in Q4 and beyond.

Meanwhile, the group announced that over 91% of Dawn Properties Limited shareholders had accepted the offer by African Sun to acquire the entire shares in the company.
The transaction should be concluded by 31 December 2020 and Dawn will become a
subsidiary of African Sun.

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