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RTG leverages on technology during pandemic

RTG Hotel Harare

Recently updated on September 8th, 2023 at 08:52 pm

With the hospitality and travel industry among the hardest hit by the coronavirus, Rainbow Tourism Group (RTG), has refocused on its digital business, which showed growth during the second quarter.

Earlier in June, the listed hospitality group activated the Gateway Stream online grocery delivery service, which has a geographical reach in all the country’s provinces.

Gateway Stream was formed in February 2018 as an integrated, versatile, innovative mobile and web-based application. At the time of its launch, it consisted of four sub-apps: Hotels, Homes and boats, Restaurants and online room auctions; all of which enabled users to book and pay for the four services.

And by the close of 2018, and with further development, Gateway Stream consisted of nine sub-apps with the addition of holiday packages, Book-a-ride (taxi-hailing service) online and events and venues.

The new grocery delivery service is expected to continue hedging the group against Covid-19 related losses in its core business.

“The group expanded the Gateway Stream super-app, which originally had hospitality and leisure, room auctions as well as homes and boats.

“The expansion involved the activation of the grocery delivery, hardware, farming and transportation services.

“The national lockdown, as well as increased demand for the delivery of take-away and grocery items, created an opportunity to expand the Gateway Stream offering to create additional revenue sources,” said chairman Arthur Manase in a statement accompanying the group’s six months interims to June 2020.

“The platform now has more than 16 000 product lines listed across eight regional online shops. The commerce being generated from a wide global diaspora geographical spread is encouraging.

“Through the Gateway Stream, the group redeployed its staff from those hotels that were closed to different regions across the country thereby leveraging the Group’s existing human resource base.”

The growth of Gateway Stream should help the group to a softer landing from the adverse impact of the health pandemic.

Globally, there has been a surge in internet-based online transaction rates as people move away from physical normal daily shopping patterns in compliance with national lockdowns.

And locally, Zimbabweans have increased their online presence over the Covid-19 period. According to the sector performance report released by regulator the Postal and Telecommunications Regulatory Authority of Zimbabwe (Potraz), there was a 56,2 percent growth in mobile internet and data traffic for the second quarter of 2020.

Meanwhile, with regards to RTG’s core business, the pandemic had expected impacts over the half-year to June 2020.

The group reported hotel occupancy level of 25 percent over the six months, down from 43 percent in the prior comparative period.

Resultantly RTG posted revenues of $230 million, which was 51 percent below the $470 million posted over the 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 at 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 the financial position remains strong despite the effects of Covid-19,” said Manase.

“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.”

RTG’s two tour operations subsidiaries — Journeys by Exotic (JBE) in USA and Heritage Expeditions Africa (HEXA) in Zimbabwe – were significantly affected by the effects of the pandemic.

The group expect business to pick up for the Zimbabwean operation. But JBE is being liquidated over broader viability concerns.

“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 the USA had commenced selling destinations around the world to the American market.

“HEXA will continue to drive the domestic business segment. 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,” said the chairman.

“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 August 31, 2020.” – eBusiness Weekly

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