The hotel, which opened in mid-2024 in partnership with the Debswana Pension Fund, was expected to benefit from the mining town’s economic activity. However, reduced diamond sales have led to cost-cutting measures by the diamond miner, meaning that the company cannot sponsor as many travels to the town as it would resulting in decreased occupancy rates and revenue for Cresta Jwaneng. Cresta Marakanelo CEO, Mokwena Morulane, confirmed the hotel’s struggles at the recent Debswana Pension fund (DPF) stakeholder engagement. He told the gathering that the lack of traffic in Jwaneng, can be attributed to the downturn in the diamond market. “One of our latest developments includes our hotel in Jwaneng and it has not been doing well due to the challenges in the diamond market,” he said.
The struggles are also reflected in the listed tourism group’s financials with the numbers for the first half of 2024 showing that business hotels, which account for 77% of Cresta’s room inventory, have been experiencing reduced occupancies. According to directors, this decline, coupled with high operating leverage, led to a drop in profitability for the period ending June 30, 2024. During the period, Cresta recorded revenue of P384.7 million, which reflected a P15.5 million decline (or four percent year-on-year) compared to the prior year. Equally, the slowing economic growth and the inherently high operating leverage of the industry further contributed to a decline in profitability. “In response, the Board and Management have implemented cost optimisation measures aligned with current revenue-generation capacity while actively pursuing market diversification strategies.”
Companies like Okavango Diamond Company conducts 10 sales events for rough diamonds each year that are attended by registered buyers from across the world, who bid on a spot auction basis for the different sizes and types of stones on offer. The state-owned diamond trader has an allocation to purchase 25% of Debswana’s annual production, a figure that averages six million carats a year. That amount is due to increase to 30% once the sales agreement between the government and De Beers is implemented. Suspension in the sight sales reduces traffic to Jwaneng which is where the mine that produces largest diamonds by carat quality is found.
