Listed hospitality group Rainbow Tourism Group (RTG) says it has already initiated the process to shut down its United States-based tour operation – Journeys by Exotic (JBE).
Like most of the group’s key segments JBE has been affected by the Covid-19 pandemic.
But the significant impact of the pandemic in the US has raised management concern over the going concern status of the operation.
The United States is one of the the worst affected countries by the infectious virus, and at at September 22 there were more than 6 million confirmed cases of Covid-19.
Said RTG chairman Arthur Manase:
“The group is in the process of winding up the operations of JBE following an assessment of its ability to continue to operate as a going concern.
“The increasing uncertainty in the American market due to heightened cases of Covid-19 has necessitated the need to discontinue operations in that market effective 31 August 2020.”
The group however remains optimistic on its tour operations in Zimbabwe – the Heritage Expeditions Africa (HEXA).
“HEXA had already commenced transfer tours, quad bike safaris, white water rafting, third-party activities, services and an adventure park at the Rainbow Towers Hotel while JBE in USA had commenced selling destinations around the world to the American market.
“HEXA will continue to drive the domestic business segment,” said Manase.
Occupancy levels for the six months period to June 30, 2020 stood at 25 percent from 43 percent in the prior comparative period.
Revenues of $230 million were achieved during the period, which was 51 percent below the $470 million posted over same period in 2019.
Gross margins for period under review closed at 63 percent from 74 percent posted in 2019.
“The decline in gross margins can be attributable to revenues lost during the lockdown period,” said the chairman.
The group posted an Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) margin of 38 percent, a growth of 19 percent compared to 32 percent posted in 2019, which was attributed to “various cost reduction initiatives adopted prior to and during the lockdown period.”
Net profit margin for the period closed on 9 percent in 2020 compared to 15 percent in 2019.
“The group’s profitability was supported by the increase in fair value of its stock market investment.
“The group’s statement of financial position remains strong despite
the effects of Covid-19,” said management.
During the period under review, the group paid the debenture of $16.7 million in full. This instrument was issued in February 2018 at an interest rate of 6 percent and tenure of 7 years.
The early payment of the debenture released the group’s assets which were pledged as security. The group’s gearing now stands at 4 percent.