Chobe Posts Good Results But Gets Butterflies Over Air Botswana

Staff Writer
The long-awaited privatisation of the national airline Air Botswana would significantly boost the tourism industry due to increased volumes of visitors to the country, says eco-tourism group Chobe Holdings.

Presenting the group's results for the six months ended 31 August 2008, Chobe Holdings Managing Director Jonathan Gibson said the privatisation of Air Botswana was expected to bring more confidence to the travel industry.

The privatisation of Air Botswana has been frozen after management contract negotiations with Com Air of South Africa snagged and before totally collapsing early this year.

"Given the perception that Air Botswana remains an unreliable provider of regular airline services, the tourism industry continues to explore alternative entry points, mainly through neighbouring countries," Gibson said.

"However, political instability in Zimbabwe and exorbitant visa fees in Zambia deter the group's clientele from taking advantage of these access routes."
Gibson said although the group's product range and marketability have been markedly enhanced by recent acquisitions, the company was worried by the potential impact of the global financial crisis on it.

"With some of the group's key markets such as the US and Germany having officially entered a recession, the spending patterns and the ability to travel of the group's clientele (in such countries) may be adversely affected.

This could result in reduced occupancies, resulting in the group's inability to sustain current levels of earnings and profitability," he said.

But with an after-tax profit of P23.7million (P17.7million in 2007), Chobe posted a solid set of results for the six months ended 31 August 2008, achieving a top line growth of 55.4 percent in the period under review. This was on the back of more bed-nights sold and improved

net accommodation rates.

But an interim dividend has not been declared in anticipation of an end of year declaration.Expenses went up by 51.8 percent due to high fuel costs and inflationary pressure on other cost drivers, including staff remuneration. The company managed to maintain an occupancy rate of 53 percent.

The BSE-listed group further increased its footprint in the tourism sector early this year by the acquisition of Ker and Downey Botswana and The Bookings Company. Through acquisitions of camps and the purchase of minority interests over the years, Chobe Holdings has become a leading player and the only Botswana-owned major group in the country's hospitality industry.

"With a limited number of sites available, which is not likely to increase in the foreseeable future, each camp that Chobe is able to control and market adds to its competitive edge over its opposition," the company said earlier this year.

"Since the group's major competitors are mainly multinational concerns, committed to a presence in the Delta, the likelihood of further high quality camps becoming available is remote."

The directors of the group said in their previous end of year results that a few transactions were at various stages of negotiation. They were referring to Desert And Delta Safaris African Travel, a South African-registered marketing and reservations company based in Cape Town.

The Group has recently acquired a further 33 percent for cash and has secured an agreement in principle to acquire the shares of the single remaining shareholder.



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