TA pins hope on hotels

20 May 2010

(Herald 20-5-2010)

TA Holdings experienced a strong performance in its hotel business in the first quarter of the year and management is confident that the robust growth witnessed in this unit will underpin the Zimbabwe Stock Exchange-listed inv-estment group’s recovery from a US$1,4 million loss suffered last year. TA Holdings controls 100 percent of Cresta Hospitality Holdings, Cre-sta Hospitality (Private) Limited and Cresta Hotels.

It also owns a 35 percent interest in Botswana registered Cresta Marakanelo.

TA chief finance officer, Bothwell Nyajeka told shareholders last week that average room rates in Zimbabwe had increased to US$52 from US$37 in December.

In Botswana, occupancy levels went up four percentage points to 70 percent during the review period from 66 percent last year.

Average room rates at the Cresta Marakanelo increased to US$96 in the first quarter, from US$72 the previous year.

Local hotels are enjoying a new lease of life following the end of hostilities between the main political actors in Zimbabwe that had triggered travel warnings in traditional source markets.

In Botswana, the Cresta group is enjoying the benefits of the World Cup, which kicks off in South Africa next month.

At least 130 000 soccer tourists are expected in southern Africa during the month-long tournament.

Hotels in Botswana were among the biggest beneficiaries of lucrative contracts from FIFA’s accommodation agency, MATCH, which faced resistance in Zimbabwe.

TA is also reaping the benefits from the massive refurbishment of its hotel properties in Botswana.

Overall, TA reported positive results across all sectors where the group has invested in the first quarter of the year.
“We believe we are now in a stronger position,” Nyajeka told shareholders at the group's annual general meeting on Wedn-esday last week.
“The group generated total revenues of US$17 million from insurance and hotels during the first quarter versus US$10 million for the same period last year.

“Operating profit was just above US$300 000 and we are confident that our current performance trajectory will take us through to profitability at the end of this year,” he added.

“Rebranding of the entire hotel portfolio in Botswana is running on schedule.

“Key objectives are greater product differentiation and consistency across all hotel properties for the Cresta identity.

Fundraising for renovation of Cresta Zimbabwe is gaining momentum — first phase is focused on Cresta Lodge. This will cost US$6 million, which will be raised on the back of group balance sheet,” added Nyajeka.

He said positive results were also reported at TA’s ammonium nitrate production associate, Sable Chemicals, which has been facing viability problems.

With capacity utilisation up two fold to 40 percent in the first quarter, Sable improved ammonium nitrate output to 25 000 tonnes compared to 46 000 tonnnes produced during the full year in 2009. Production is expected to hit 40 000 tonnes by June.

In his 2009 annual report, chairman, Shingai Mutasa suggested that the swiftest way of controlling losses at the Sable plant would be to close its electrolysis plant and import ammonia feedstock.

“Unfortunately, there are not enough railway tank cars to permit Sable to import all the ammonia necessary to dispense with the electrolysis plant,” Mutasa said.