By Alois Vinga
LOCAL hotelier, the Rainbow Tourism Group Limited’s (RTG), has seen its share price increase tenfold owing to good management practices, chief executive officer Tendayi Madziwanyika has said.
The performance according to Madziwanyika has helped the company’s balance sheet to a growth trajectory.
In an interview with NewZimbabwe.com Business Wednesday, Madziwanyika said the details hinting that the hotel group is poised for higher growth.
“The group’s share price increased tenfold from ZWL$0.93 cents to ZWL$8.50 cents and going forward we anticipate that the company will perform much better and boost the share price,” he said.
Occupancy levels in the first five months of 2019, according to Madziwanyika rose from 7% to 61% while on average every room is raking in ZWL$53 registering a 36% increase.
“We have managed to shift from a negative working capital of ZWL$24 million to a position of ZWL$3.7 million which is normal in business while foreign currency revenues grew by 15% to US$4.2 million,” he said.
This year, the RTG, managed to pay the first dividend to shareholders since 2006 with part of the dividend in United States dollars.
Broken down, US$300 000 was the hard currency component while ZWL$ 700 000 constituted the local currency component.
The RTG has also registered remarkable financial performance, with a revenue growth of 27% in the financial year ending December 31 2018.
Operating profit during the period under review increased 10 times to RTGS$ 5.6 million while foreign currency revenue totaling US$11 million was generated.
A gross profit margin at 71 % was achieved between January and May 2019, representing a 6% growth.
In the period ending May 2019, the company invested US$1.8 million in the refurbishment of the Bulawayo Rainbow Hotel and the scope of the works covered an overhaul of the hotel’s entire plumbing system including replacement of all critical in room fixtures.
In 2012, the RTG was technically insolvent before the turnaround. The group had a funding gap of US$16 million, resulting in net exposure of US$42 million. However, following the various initiatives of debt restructuring that include debt write-offs and capital calls the hotel group has managed to strengthen its balance sheet and is optimistic of future growth.