African Sun hotel occupancy drops to 37 percent

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By Alois Vinga

LEADING hospitality group, African Sun has reported a 37 % room occupancy levels decline due to low disposable incomes, unemployment further complicated by the tight Covid-19 lockdown travel restrictions.

Presenting a trading update Monday, the hotel group’s company secretary, Venon Musimbe attributed the poor performance to tight Covid-19 travel restrictions.

He also hinted that poor incomes and high unemployment rates also had a bearing on the local economic front.

“For the three months ended September 30, 2020, occupancy decreased by 37 percentage points compared to the same period last year (SPLY). Turning to year to date (“YTD”) performance, occupancy was down 28 % compared to the prior year,” he said.

He said on the domestic economic front, macro-economic performance continued to be subdued, largely due to foreign currency shortages, low disposable incomes and high unemployment.

The remarks come at a time when the country is experiencing economic challenges which have eroded the salaries with the majority of civil servants who generally make up the middle class earning a net salary of around US$140.

The International Trade Union Confederation classifies Zimbabwe among the world’s ten worst destinations for workers.

Meanwhile, the hotel group revenues for the third quarter were down 78 % at $261 million compared to SPLY.

While Group performance for the quarter under review continued to suffer from Covid-19, key group performance indicators during the quarter showed a steady recovery with occupancy improving from 5% in the second quarter to 14% in the just ended quarter.

The slight improvement was driven by the relaxation of lockdown restrictions, together with a number of promotional initiatives by the group to improve demand.

On the year to date (YTD) performance, revenue for the period decreased by 62% at $965.3 million against SPLY. The decrease is attributed to the Covid-19 pandemic and the related reduction in global travel and tourism.

“Looking ahead, we expect international business to remain subdued over the coming months due to the resurgence in Covid-19 cases in our key source markets. This second wave of infections requires continued diligence and dexterity to manage costs and preserve cash,” added Musimbe.