ASL to shell out US$12m on upgrade, new projects

LIVINGSTONE MARUFU

 

Hospitality group African Sun Limited, (ASL) has planned to invest around US$12m in hotel upgrades  and the development of new projects in the next  two years  as the company moves to meet world class standards.

The VFEX-listed concern projects international tourism to recover this year resulting  in pent-up demand, particularly from Asia and the Pacific as destinations and markets open up hence  beautified hotels will attract more tourists.

In a 2022 annual report, ASL board chairman Emmanuel Fundira said there are   some hotels due for upgrades while the hospitality entity is excited with completion of upgrades in other hotel refurbishments.

“We estimate spending approximately US$12m within the next year or two, depending on business and economic performance, to be funded from our own cash position and borrowings. In this regard, the group has commenced preparatory work to upgrade all our hotels to world class standards,” Fundira said.

He said the group’s migration to Victoria Falls Stock Exchange is set to provide ASL with increased capacity to raise the necessary funds to support the ongoing renovations of its hotels and the development of new projects.

The group’s funding plans and initiatives have been negatively affected by the recent monetary policy statement that removed foreign currency liquidation exemptions for companies listed on the VFEX and companies in the tourism sector.

“This will make it more difficult for us to access the funding necessary for the extensive refurbishment projects. We will however continue to explore other funding opportunities and leverage our strong relationships with investors and financial institutions to secure the necessary resources to drive our business forward. We are confident that with our experienced team, strategic partnerships, and commitment to excellence, we will achieve our goals and deliver value to our stakeholders,” Fundira said.

The company ceased operations at The Kingdom at Victoria Falls hotel effective  January 5  2023. The hotel has been under the African Sun stable since 1966 and was leased from Makasa Sun (Private) Limited.

During the year under review, the hotel contributed US$5m towards group revenue and US$380,000 towards profit before tax.

The various hotel refurbishment and expansion projects in the pipeline are expected to ease the profitability pressure that will result from the closure of Kingdom Hotel.

The group’s cash deployment strategy remains unchanged, focusing mainly on targeted capital expenditure on hotel assets in order to enhance the experience of its valued guests and to preserve value.

“During the third quarter of 2022, we completed the refurbishment of 47 rooms and the kitchen at the majestic five-star, The Victoria Falls Hotel. The group, together with our partner, Meikles Limited, invested approximately US$5m towards the refurbishment of this property.  The group also completed the refurbishment of all 70 rooms at Troutbeck Resort during the last quarter of 2022,” Fundira said.

Meanwhile, work on the Hwange Safari Lodge rooms refurbishment commenced in August 2022 and as at the date of this report, 56 rooms had already been completed with the remaining 44 rooms expected to be completed before the middle of the year. The refurbishment of the remaining rooms at Great Zimbabwe Hotel, including the conference centre is at an advanced stage and is expected to be complete by mid-year, Fundira said.

Group revenue for the year ended December 31 2022 amounted to US$53.2m, a 62% growth from prior year. and 60% of the group revenue was generated in foreign currency.

This was on the back of a 15 percentage point increase in occupancy and average daily rates

Occupancy at 46% was 2 percentage points below the 48% that was achieved in 2019, the last normal trading year before Covid-19.  Hotel revenue was split 81% and 19% between domestic and foreign arrivals respectively. The improved performance reflects recovery of both domestic and foreign business.

The City and Country hotels recorded 58% occupancies (2021: 45%) whilst the Resort hotels, which have not fully recovered from the impact of COVID-19, achieved an occupancy level of 36% (2021: 19%).

The hospitality segment contributed 98% of group revenue while the real estate segment contributed 2%.

 

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