HOSPITALITY company, Rainbow Tourism Group (RTG), has in the first five months of the year registered a strong performance with its revenue base growing by 131 percent from US$11,1 million to US$25,6 million.
In its trading update for the period ended May 2019, RTG attributed the positive performance to improved foreign currency business received across the group’s hotels.
“In the first five months of 2019, the company grew revenue by 131 percent from $11,1 million to US$25,6 million. The growth was spurred by an increase in foreign currency business received across all the company’s hotels,” said the group.
“Foreign currency revenues grew by 15 percent from US$3,7 million in 2018 to US$4,2 million.”
However, occupancies for the period under review declined to 46 percent compared to 55 percent recorded over the same period in 2018.
RTG said the closure of Bulawayo Rainbow Hotel for two and half months due to refurbishments weighed down on group occupancies during the period under review.
“On a like-for-like basis, which takes account of the closure for two and a half months of the Bulawayo Rainbow Hotel, the occupancy for the period closed at 54 percent.
“A deliberate and persistent investment in the product as well as service delivery systems, have been the cornerstone of this growth.
“The company posted a positive set of performance indices with the exception of occupancies,” said RTG.
It said that a gross profit margin at 71 percent was achieved in May, representing a six percent growth from 67 percent recorded in 2018.
The growth in gross profit margin was driven by increased rooms, and food and beverage profitability.
RTG said it was leveraging its foreign currency earnings to drive down costs through the importation of service stocks and product refurbishment materials.
The group said it has also negotiated with suppliers on US dollar pricing and this has yielded positive results that have further weighed down costs.
On the outlook, RTG said the operating environment remains under stress due to continued foreign currency shortages, rising inflation, fuel shortages and erratic electricity supply.
“However, we remain optimistic that the business will continue to perform well driven by the company’s foreign currency earning capacity. RTG is deploying an asset-light business model, which includes the RTG Virtual partnership platform to grow its revenues,” it said.
“We will continue to own and operate hotels.
“However, in order to achieve the multiplier effect for our shareholders we will also seek to unlock value from our extensive marketing, procurement and operational systems of our value chain by activating the network effect of our partners in the hospitality space.”
The effectiveness of the platform, the hotel group said, was proven in 2019 during the temporary closure of the Bulawayo Rainbow Hotel.