HARARE – Rainbow Tourism Group (RTG) is now debt-free, this is after the group managed to pay off its remaining debt during the 2020 financial year.
In the company’s 2020 full year financial results, the RTG board chairman Arthur Manase said that during the year, the group repaid the debenture of ZW$16.7 million in full. This instrument was issued in February 2018 at an interest rate of 6% and tenure of 7 years. The early repayment of the debenture released the group’s assets which were pledged as security.
The repayment of the debenture reduced the group’s gearing to 1%. This is in comparison
to a 70% gearing in 2012, The debt instrument enabled the Group to restructure its balance sheet and put closure to the last of its long-standing legacy issues. The liquidation of the debenture is a significant milestone achieved during one of the most trying times for the group and the tourism industry at large.
Manase reported that 2020 presented a volatile operating environment which was
compounded by the emergence of the COVID-19 pandemic. Despite these challenges, the
Group’s Profit Before Tax margin grew to 39% in 2020 from 29% in 2019, whilst the Group
achieved an Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) margin
of 42%, up by 31% compared to 32% posted in 2019.
Chief Executive Officer, Tendai Madziwanyika said; “In response to the decline in
business activity brought about by a highly uncertain environment perpetuated by the
COVID-19 pandemic, we embarked on a stringent cost-suppression program in response to
the reduction in revenue. This helped maintain profit margins at 2019 levels”.
The group successfully completed the refurbishment of the Rainbow Towers Hotel and
Conference Centre in the first quarter of 2020. The refurbishment included the rooms rebuild of 183 rooms. Works included the complete stripping and reconstruction of the rooms and the replacement of all furniture and fittings to modernize the rooms to world-leading standards.
The refurbishment was completed in a record three months at an investment of
US$4.4 million, using funds generated from operations. “The refurbishment was completed
in record time, just before the Government announced the COVID-19 lockdown. It was this
investment that assisted the Group to win the bid to host over 1 400 returning citizens who
worked on cruise ships who had to undergo mandatory quarantine” said Madziwanyika.
Occupancy for the period under review went down from 47% in 2019 to 26% in 2020 owing to the COVID-19 pandemic lockdown restrictions which resulted in the temporary closure of the hotels.
The most severely affected of the Company’s hotels were the two Victoria Falls resort hotels; Azambezi River Lodge and Victoria Falls Rainbow Hotels which were closed from March 2020 to December 2020. This was further compounded by the temporary closure of the Rainbow Towers Hotel and Conference Centre for refurbishment in the first two months of the year.
It is during this period that the Company activated the Gateway Stream mobile and web
application which made a positive impact on the Group’s profitability. The COVID-19
pandemic and the subsequent lockdowns led the Group to focus on growing the digital
business. “Gateway Stream has been positioned as a driver of revenue and continues to
capitalize on the opportunities presented by e-commerce. The platform entails several
revenue generation channels which are expected to drive revenues in 2021 and beyond,” he said.
In his outlook, Manase said that the Group will continue to prepare for the inevitable rebound of the travel and tourism sector by continuing to recruit rooms and activities across Africa onto the Gateway Stream platform. Many travel and tourism players will require visibility when the industry rebounds. Gateway Stream seeks to be a significant player in that space alongside global e-commerce giants that provide access to hospitality and leisure products.