ASL buoyant | Business Times

CLOUDINE MATOLA

African Sun Limited (ASL), a publicly traded hospitality group, remains upbeat about its prospects in 2025 despite facing significant macroeconomic and geopolitical headwinds.

The group is drawing confidence from strong performance in the local tourism market and a sustained rebound in international travel, even as it anticipates some pressure from reduced development assistance and tight liquidity conditions in Zimbabwe’s economy.

In his statement accompanying the company’s financial results for the year ended December 31, 2024, ASL chairman Lloyd Mhishi acknowledged the challenges ahead but highlighted ongoing momentum in tourism recovery and the company’s strategic readiness to respond.

“As we move into 2025, we remain optimistic about the recovery of the tourism sector, building on the progress made in the local market and the ongoing rebound of international travel,” Mhishi said. “The UN Tourism Organisation forecasts a 5% growth in international tourist arrivals, driven by the full recovery of the Asia and Pacific markets and robust growth across most other regions.”

However, Mhishi cautioned that optimism must be tempered by a realistic assessment of the risks. He pointed specifically to the fallout from the United States’ suspension of foreign aid and constrained domestic business conditions.

“The tourism sector does however face significant risks from economic and geopolitical challenges. The suspension of foreign aid funding by the United States is expected to negatively impact business from non-governmental organisations (NGOs) and other government-funded programs. Locally, business activity is expected to remain subdued due to tight liquidity and low Government expenditure,” he said.

To position itself for long-term growth, ASL is undertaking an ambitious refurbishment programme across several of its flagship properties. The investments are designed to elevate guest experiences and strengthen the company’s share in a competitive hospitality landscape.

“Plans for 2025 include commencing the refurbishments of Holiday Inn Harare, Elephant Hills Resort, Troutbeck Timeshare Lodges and the second phase of renovations at The Victoria Falls Hotel,” Mhishi said. “The downside of these refurbishments is the reduced rooms inventory for the Group for the 2025 financial year. These strategic capital investments aim to enhance guest experiences and grow the portfolio’s market share.”

While these renovations are expected to temporarily lower available room capacity, the group is confident the long-term benefits will outweigh the short-term impact, particularly in attracting higher-value clients and securing repeat international bookings.

Despite a challenging environment, ASL posted strong financial results for the 2024 financial year. Revenue from continuing operations rose by 15% to US$53.98 million, compared to US$46.98 million in 2023. The group cited a combination of improved occupancy and stronger Average Daily Rates (ADR), which increased to US$119 from US$115 in the prior year.

Further support came from ASL’s real estate segment, which contributed US$3.02 million in revenue, largely from the sale of residential stands. Including discontinued operations, total revenue for the year grew by 14% to US$62.22 million.

Operating expenses increased by 15% to US$43.56 million, driven by higher business volumes and inflationary cost pressures. Fiscal policy shifts also played a role, with changes such as the reclassification of VAT on certain products and a new sugar excise duty impacting input costs.

Nonetheless, ASL succeeded in narrowing its group loss to US$274,067—down from US$364,589 the previous year. The company also reported a strong liquidity position, with US$10.2 million in cash and cash equivalents, 96% (US$9.77 million) of which was attributed to continuing operations.

In addition, the group holds US$1.15 million in equity financial instruments to support working capital and maintain financial agility in the face of economic volatility.

With traditional revenue from NGOs and aid-related travel expected to decline due to the suspension of US foreign assistance, ASL is recalibrating its focus toward domestic and international leisure travel. Its refurbishment strategy, operational efficiencies, and diversified asset base are seen as critical tools for mitigating downside risks.

ASL’s leadership is also betting on the recovery of international tourism markets. The United Nations World Tourism Organisation’s projection of a 5% global increase in tourist arrivals adds weight to the group’s cautious optimism, especially as Asia and the Pacific regions return to full-scale travel.

Tourism experts note that Zimbabwe’s sector has historically demonstrated resilience in the face of shocks—from pandemics to currency instability—and believe that ASL is among the best positioned players to benefit from any upturn.

As a publicly traded hospitality group, ASL’s upbeat outlook is underpinned by strategic capital deployment, disciplined cost management, and a focus on enhancing its value proposition. The group’s deliberate approach—balancing investment with operational prudence—illustrates how hospitality businesses can remain forward-looking even in adverse conditions.

“Optimism alone is not a strategy,” remarked a regional tourism analyst. “What ASL is doing is pairing that optimism with a strong balance sheet, a clear investment roadmap, and an understanding of how to create value in a constrained environment.”

If the international recovery holds and refurbishments are completed on schedule, ASL is poised to capture new market segments and improve profitability in the medium term.

For now, the group remains focused on executing its strategy, maintaining liquidity, and investing in the future—while staying responsive to both global and local uncertainties.

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