Rainbow Tourism Group

LEADING economists this week gave the thumbs up to Rainbow Tourism Group (RTG) chief executive officer (CEO) Tendai Madziwanyika’s turnaround plan but hinted that while success was achievable, several macroeconomic factors in Zimbabwe and globally would determine the pace and scope of the growth.Results of upcoming general elections expected later this year, progress in resolving the Euro Zone financial crisis, success of the United Nations World Tourism Organisation (UNWTO) general assembly expected in Victoria Falls in August and whether RTG’s cost cutting measures would not compromise service delivery were among the key factors at play.

Madziwanyika, who replaced Chipo Mtasa as CEO in November last year, has put in place a cash generation strategy that would be backed by e-commerce and aggressive marketing.

He said he would be watching costs closely, and improving the group’s image.

In an interview with The Financial Gazette’s Companies & Markets (C&M), Madziwanyika predicted that turnover would rise to US$45 million in three years, from US$27 million in 2012.

United Kingdom-based academic and financial markets expert, Lance Mambondiani, said there were “low hanging fruits” in the tourism industry that a well thought out business model could easily capitalise on.

“With an efficient delivery structure, it is possible for the market and RTG’s profitability to be turned around,” said Mambondiani.

“Unfortunately, the success of this industry is depended on the country risk factor. An improvement in international perceptions of the country as a safe destination would increase tourist arrivals and occupancy ratios for RTG and all the other hotels,” he said.

“The big elephant in the room is the forthcoming elections, seeing we have a history of a volatile political atmosphere during an election period,” Mambondiani told C&M this week.

“Any turnaround strategy for any business in the tourism industry is inextricably linked to whether the election turns out to be peaceful or not,” said Mambondiani.

The picture looks gloomy ahead of polls, however. Reports of violence have been heard across the country, with a crackdown on rights activists highlighted by the recent arrest of legal practitioner, Beatrice Mtetwa, escalating.

Bulawayo-based analyst, Eric Bloch, said Madziwanyika’s major advantage was that his turnaround plan was timeous as there were strong indications that Zimbabwe would register increased tourist arrivals post elections.

“The sector is poised to grow, conditionally upon the forthcoming elections being properly conducted, with transparency and an absence of violence, intimidation and harassment,” Bloch said.

“RTG’s growth projections are realistic, and attainable. A key issue is that in attaining cost reductions, RTG must not do so in a manner that runs counter to enhancement of service delivery and operational efficiencies,” said Bloch.

The UNWTO meeting may help reshape perceptions against Zimbabwe as a result of possible positive publicity if it is well planned.

Events of this magnitude usually attract global media.

At the same time, it (UNWTO) will highlight the country’s diverse product offerings to the global market.

Other analysts said the success of RTG’s growth plan hinged on support from key shareholders who have fought over control of the group for close to a decade.

The National Social Security Authority, currently with a 27% shareholding, could become RTG’s majority shareholder if Africa First ReNaissance Corporation decides to sell its 20% shareholding.

British businessman, Nick Van Hoogstraten is presently the majority shareholder with about 36% shareholding.

From: allafrica.com

Date: 17 April 2013