Cape Town

Meikles intends to dispose of the Cape Grace

From BusinessLive.co.za
By Tawanda Karombo
26 June, 2011 13:42

Tourist arrivals into Zimbabwe and hotel occupancy levels at African Sun’s hotels registered a significant increase in volumes during the financial half-year to March 31.

However, the group, which operates the Holiday Inn, Crown Plaza and other hotel operations in Zimbabwe’s major urban and tourist resort areas, recorded depressed arrivals at its South African hotels during the same period.

African Sun group chairman Timothy Chiganze attributed this to “an oversupply of hotel rooms in the Johannesburg area” but revealed that the situation was set to improve during the second half of the current trading period.

Occupancy levels at the firm’s South African hotels – which include the Grace in Rosebank, Johannesburg – were 30%, down from last year’s 47% for the same period.

Positively though, the company has managed to add “an additional 4,100 rooms” to its hotels in the Rosebank and Sandton areas of Johannesburg during the past two years. Revenue achieved by the group from the South African leased hotels amounted to $2.72 million, signifying a 23% decline from the same period last year.

For the period under review, occupancy levels at the group’s Zimbabwe resort hotels – which also include the Elephant Hills at Victoria Falls and Troutbeck Inn at Nyanga – finished 47% stronger, up from the previous comparative period’s figure of 40%.

“Arrivals into Zimbabwe hotels have continued on the recovery path, with local and foreign room nights increasing by 7% and 32% respectively, in comparison to the same period last year,” said Chiganze.

The company’s Harare and Bulawayo hotels performed well, sustaining occupancy levels of 63% (59% the previous year) while hotels in resort areas were behind, at 35% compared with the previous comparative levels of 28%.

With Zimbabwe’s economy slowly beginning to rebound and being projected to continue on the current growth trajectory, African Sun is expecting “the recovery in Zimbabwe to continue”.

Chiganze said that, based on African Sun’s $27.7 million combined revenue for the half-year under review, “the group has revised downwards the full year forecasts”. Previously, he said, the group had projected that revenue for the full year to the end of September would be $64 million. His company forecast full-year revenue coming in at $59.6 million, 7.6% down from the initial estimate.

“This revision is mainly attributable to the depressed performance of South African and Hotelserve operations, a delay in the opening of Holiday Inn Gaborone and the expected once-off restructuring cost in the second half.”

He also revealed that “airline seats into the major entry ports of Harare and Victoria Falls “increased” owing to the “introduction of additional flights by regional carriers”.

This, Chingaze said, had helped avert a potential national aviation crisis following problems encountered by state carrier, Air Zimbabwe, which is battling a heavy saddle of debts and failure to pay its pilots and other employees.

Prospective investors in the aviation sector have in recent months slammed the government for failing to open up the airways and for protecting the paralysed flag carrier by denying potential rival operators licences for some lucrative routes.

In the second quarter of the current financial year, African Sun says it intends to add “231 more rooms” and is forging ahead with construction of a “new Amber Express” in Ghana’s capital, Accra.

Meanwhile, rival hotel operator Meikles Limited, which has successfully demerged from Kingdom Financial Holdings Limited following direct conflicts between Zimbabwean banker Nigel Chanakira and Meikles chairman John Moxon, has registered 43%, 45% and 66% occupancy levels for the firm’s Meikles Hotels, the Victoria Falls Hotel and the South African Cape Grace Hotel respectively during the same trading period.

Interestingly, Meikles said this week that it intended to dispose of the Cape Grace Hotel, a situation that initially sparked the bitter fall-out between Moxon and Chanakira, who was opposed to the selling of the top-end property and culminated in the subsequent demerger of Meikles and Kingdom Financial Holdings from Kingdom Meikles Africa Limited, which also encompassed Tanganda (a tea estate and processing concern) and little-known Cotton Printers

“Occupancies to date have shown further growth reflecting the strong interest in Zimbabwe as both a tourist and business destination,” the company said during the week. Meikles Limited’s hotels recorded earnings before interest, tax, depreciation and amortisation (ebitda) of $3.2 million, a significant increase on the previous period’s ebitda of $2.3 million.

And just like African Sun, Meikles says it will be refurbishing its flagship Meikles Hotel in Harare.

“Funding is in place for the first phase of the refurbishment of the Meikles Hotel and this will begin in the next two months. Further funding is being sought for the complete refurbishment of the hotel,” Moxon said.