RTG pays off debenture, now debt free

LISTED hospitality company, Rainbow Tourism Group (RTG) is now debt-free, after paying off outstanding debts during the year to December 31, 2020, the company’s chairman Arthur Manase said.

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RTG chief executive officer, Tendai Madzivanyika

Announcing the company’s financial results Manase said the repayment of the debenture reduced the group’s gearing to one percent. In 2012 RTG’s gearing was at 70 percent.

“During the year, the group repaid the debenture of $16,7 million in full. This instrument was issued in February 2018 at an interest rate of six percent and tenure of seven years. The early repayment of the debenture released the group’s assets which were pledged as security,” Manase said.

He said the debt instrument enabled RTG to restructure its balance sheet and put closure to the last of its long-standing legacy issues.

“The liquidation of the debenture is a significant milestone achieved during one of the most trying times for the Group and the tourism industry at large,” he said.

Manase said the operating environment in 2020 was volatile, worsened by the coronavirus (Covid-19) pandemic.

During the period under review, RTG recorded a profit after tax of $352 million from $914 million. Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) margin of 42 percent was a 31 percent increase from 32 percent recorded in 2019.

Commenting on the results, Tendai Madziwanyika, RTG’s chief executive officer said: “In response to the decline in business activity brought about by a highly uncertain environment perpetuated by the Covid-19 pandemic, we embarked on a stringent cost-suppression program in response to the reduction in revenue. This helped maintain profit margins at 2019 levels”.

During the period under review the group completed the refurbishment of the Rainbow Towers Hotel and Conference Centre in the first quarter of 2020. The refurbishment included the rooms rebuild of 183 rooms. Works included the complete stripping and reconstruction of the rooms and the replacement of all furniture and fittings to modernize the rooms to world-leading standards.

The refurbishment was completed at an investment of US$4,4 million, using funds generated from operations.

“The refurbishment was completed in record time, just before the government announced the Covid-19 lockdown. It was this investment that assisted the group to win the bid to host over 1 400 returning citizens who worked on cruise ships who had to undergo mandatory quarantine” said Madziwanyika.

Occupancy for the period under review went down from 47 percent in 2019 to 26 percent in 2020 owing to the Covid-19 pandemic lockdown restrictions which resulted in the temporary closure of the hotels.

He said the most severely affected of the company’s hotels were the two Victoria Falls resort hotels; A’ Zambezi River Lodge and Victoria Falls Rainbow Hotels which were closed from March 2020 to December 2020. This was further compounded by the temporary closure of the Rainbow Towers Hotel and Conference Centre for refurbishment in the first two months of the year.

It is during the period the company activated the Gateway Stream mobile and web application which made a positive impact on the group’s profitability. The Covid-19 pandemic and the subsequent lockdowns led the group to focus on growing the digital business.

“Gateway Stream has been positioned as a driver of revenue and continues to capitalize on the opportunities presented by e-commerce. The platform entails several revenue generation channels which are expected to drive revenues in 2021 and beyond,” he said.

Going forward, Manase said that the group will continue to prepare for the inevitable rebound of the travel and tourism sector by continuing to recruit rooms and activities across Africa onto the Gateway Stream platform.

Many travel and tourism players will require visibility when the industry rebounds. Gateway Stream seeks to be a significant player in that space alongside global e-commerce giants that provide access to hospitality and leisure products.

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