Zambia operations pulls down Cresta profits

| Tuesday September 9, 2014 12:35

In the period, revenues from Cresta’s Gold View Hotel in Zambia dropped by 26 percent to P9.3 million scaling down the group’s profits by 31 percent to P5.1 million for the half-year ended 30 June 2014. Commenting on the published financial results, Cresta managing director, Tawanda Makaya said Zambia experienced a decline in business due to more hotels coming up in Lusaka therefore making competition very stiff. Business was also affected by the relocation of Non-Governmental Organisation’s (NGO’s) from Lusaka. “These have lead to occupancies dropping significantly and forcing management to reduce rates in order to fill the rooms,” he said. The Zambia operations, which were acquired in 2012 for $2.5 million, contributed 6.6 percent to the group’s revenues,” said the MD. Cresta Marakanelo manages nine hotels in Botswana. Gold View’s occupancy rate dropped by 31 percent while the operation recorded a loss of P1.7 million. However the loss was also caused by the foreign exchange loss, which affected the business current earnings by P2.3 million. “This was as a result of fluctuations of the exchange rate where the Kwacha weakened against the pula,” he said. However, the group recorded an increase in revenue of 8,5 percent to P140 million in 2014 compared to the same period last year. In Botswana operations, the group had recorded five percent increase in profits to P9.3 million compared to P8.8 million last year. Revenues for the Botswana operations, which constitutes 91.6 percent of the hotel group capacity, increased by 12 percent to P130 million. On the other hand the occupancy rate grew by 3.6 percent to 61.5 percent largely due to a recovery in business in the second quarter of the year. “This performance was achieved at the back of a disappointing first quarter of the year,” Makaya said. The revenue growth was driven by the group’s volume based strategy under which the group drove capacity utilisation and regaining lost market share. Even though Botswana operations were slow in the first quarter, only picking in the second quarter, with more travellers landing in most parts of the country. Makaya said the second quarter of the year was very strong as the operations posted good results. “The period under review saw the hotels in Botswana experiencing difficult trading conditions with a decline in local business in the first quarter of the year,” he said. Cresta Marakanelo was established in 1987 when Cresta Hospitality was awarded the management contract for Marakanelo Hotels by Botswana Development Corporation (BDC). Cresta Hospitality Holdings is one of Southern Africa’s largest hotel management groups, managing or operating 13 hotels in Zimbabwe, Botswana and Nigeria. From an initial portfolio of less than 100 rooms under management, the group now manages close to 800 rooms in Botswana. TA Botswana and the Botswana Government, through the BDC, jointly own Cresta Marakanelo. TA Botswana is owned by Zimbabwe Stock Exchange-listed TA Holdings Limited, a company with an investment portfolio that extends from Zimbabwe to Botswana, South Africa, Uganda and Nigeria. 
Cresta Marakanelo listed on the Botswana Stock Exchange (BSE) in 2010 after the BDC offloaded its 62.9 million shareholding through an Initial Public Offer (IPO), a private placement and an employee scheme.