• Kingdom Hotel closure led to significant financial losses for ASUN: Half-year loss of US$1.8 million and full-year loss of US$360,000 in 2023
  • ASUN's occupancy rates improve but profitability declined: Occupancy rate exceeded 50%, surpassing pre-pandemic levels, but profitability continued to decline
  • ASUN is focusing on refurbishment projects and seeks financing: Embarks on refurbishment projects, including Hwange Safari Lodge, while actively engaging with local financial institutions to secure standby financing facilities

Harare- After the closure of the renowned Kingdom Hotel in Victoria Falls, African Sun (ASUN), the leading hotel group, experienced a period of below-average performance. The loss of the 294-roomed Kingdom Hotel primarily impacted ASUN's financials, resulting in a half-year loss of US$1.8 million of which US$0.75 million was from this discontinued operation.

Despite an improvement during the third quarter, the company's financial situation did not improve good enough to bridge the loss of US$1.8 million, as evidenced by a full-year loss of US$360,000 in full-year 2023, compared to a profit of US$7 million in 2022. The profit from continuing operations also plummeted from US$7.6 million in the previous year to a mere US$520,000, representing a significant drop of over 100%.

ASUN, originally known as Rhodesia National Hotels (RNH), has a distinguished history in Zimbabwe's hospitality industry dating back to 1968. Initially entrusted with managing government-owned hotels, RNH focused on meticulously overseeing properties located in key tourist destinations such as Victoria Falls and Great Zimbabwe. In 1983, following Zimbabwe's independence, RNH underwent privatization and rebranded as African Sun Limited. This transition marked a pivotal moment for the company, leading to an expansion of its portfolio to include a wide range of hospitality services, including hotels, resorts, and casinos, solidifying its presence in the industry.

Presently, ASUN operates with remarkable efficiency through four distinct divisions: Hotels Under Management, Hotels Under Franchise, Owner-managed Hotels, and the Victoria Falls Hotel Partnership. The company manages esteemed establishments such as The Victoria Falls Hotel, Holiday Inn, Great Zimbabwe Hotel, The Caribbea Bay Resort, Hwange Safari Lodge, Monomotapa Hotel, and Troutbeck Resort.

Despite achieving an occupancy rate of over 50%, inching closer to pre-pandemic levels, these properties experienced declining profitability. Prior to the COVID-19 pandemic, ASUN consistently exceeded 60% occupancy, reaching as high as 75% in Q3 2018. Additionally, the company saw a decline in finance costs from US$180,000 to US$10,000.

However, the discontinued operations of Kingdom Hotel and Makasa Sun Casino resulted in a loss of US$890,000, surpassing the profit generated from other operations.

Following the closure of Kingdom Hotel, ASUN embarked on extensive refurbishment projects, including the renovation of 46 rooms at Hwange Safari Lodge and the improvement of public areas at Troutbeck and the Great Zimbabwe conference center. However, the absence of the 294-room Kingdom Hotel poses a challenge as demand for accommodations continues to rise, leaving ASUN unable to meet the shortfall in room capacity.

The closure of Kingdom Hotel was the result of a lease dispute between ASUN, the hotel's occupant since 1997, and the property owners, First Capital Bank (FCB). Negotiations for lease renewal took place in 2022, with FCB proposing a shorter two-year lease agreement, while ASUN advocated for a 10-year extension to recoup its investment. Unable to reach a mutually agreeable settlement due to differences in lease terms, ASUN and FCB could not sustain operations at Kingdom Hotel, leading to its closure.

Currently, ASUN is actively engaging with local financial institutions to secure standby financing facilities. These funds are being utilized for ongoing and future hotel refurbishment projects, with a primary focus on completing the renovation of the remaining 46 rooms at Hwange Safari Lodge. ASUN acknowledges the impact of losing ownership of Kingdom Hotel and recognizes the need to address the void created by its closure. Expanding the room inventory is imperative to mitigate the revenue loss caused by the closure.

With this, ASUN is also seeking to diversify its revenue streams by exploring property markets, a strategic move to offset the financial impact of the Kingdom Hotel closure and ensure long-term sustainability.

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