Listed hospitality group, Rainbow Tourism Group (RTG) says leveraging on technology is key aspect of its long-term business prospects.
The group is focusing on asset light business strategy based on digital platforms.
Said RTG chief executive officer Tendai Madziwanyika:
“Technology will become even more important as access to data continues to improve and the availability of other distribution systems such as Wi-Fi become more pervasive. We believe that the future will be driven by technology.
“RTG will expand its tentacles into Africa using the Gateway Stream Application, through various partnerships with hotel groups across the continent.”
“RTG is deploying an asset-light business model which includes the RTG Virtual partnership platform to grow its revenues,” he told shareholders at the company’s annual general meeting.
“We will continue to own and operate hotels. However, in order to achieve the multiplier effect for our shareholders we will also seek to unlock value from our extensive marketing, procurement and operational systems of our value chain by activating the network effect of our partners in the hospitality space.
“The effectiveness of the platform was proven in 2019 during the temporary closure of the Bulawayo Rainbow Hotel. Revenues of ZWL$528,000 were generated over this period compared to ZWL$38,000 in 2018.”
The trading update also highlighted that the group’s 2019 revenues maintained an upward trajectory, jumping 131 percent revenue jump to ZWL$25,6 million for the five months to May 2019.
This was up from ZWL$11 million recorded during the same period in the prior year.
Madziwanyika attributed the growth to an increase in foreign currency business received across all its hotels.
Resultantly, foreign currency revenues grew by 15 percent to US$4,2 million from US$3,7 million in the comparable prior year period.
For the just ended financial year, revenue amounted to ZWL$34,3 million which was 27 percent above the prior year.
Occupancies for the five-months period were down to 46 percent compared to 55 percent recorded over the same period last year.
This was attributable to the closure of Bulawayo Rainbow Hotel for two and half months due to refurbishments.
“On a like-for-like basis which takes account of the closure for two and a half months of the Bulawayo Rainbow Hotel, the occupancy for the period closed at 54 percent.
“A deliberate and persistent investment in the product as well as service delivery systems have been the cornerstone of this growth. The company posted a positive set of performance indices with the exception of occupancies,” said Madziwanyika.
At 71 percent, gross profit margin went up 6 percent from 67 percent recorded in the same period last year driven by increased rooms and Food & Beverage profitability.
The group is utilizing its foreign currency earnings to drive down costs through the importation of service stocks and product refurbishment materials.
He said negotiations with suppliers on US$ pricing have yielded positive results that have further reduced costs.