COVID-19: How booking cancellations wiped out African Sun’s first quarter recovery

Hotels group African Sun had a better first quarter this year than it did in the violence-hit first quarter of 2019, but 32 000 room night cancellations due to COVID-19 wiped out that slim recovery.

Occupancy in the first quarter of 2020 was slightly ahead of the first three months of 2019, when tourism suffered cancellations due to protests over fuel price hikes.

However, as at this May, the company had suffered cancellations of 31 907 room nights, “being quite substantial for the business”, African Sun says in its latest trading update. This reversed the two-percentage point increase in hotel occupancy that had been recorded in the first quarter.

“The recovery from Q1 of 2019 was largely due to a relatively stable operating environment in contrast to the comparable quarter last year which had civil unrest and national shutdown protests,” African Sun said.

Room nights sold increased by 4% from 52,617 reported in the comparable quarter last year to 54,972 this year. Business mix for the first quarter with regards to room nights was 67% local and 33% foreign.

“Export room nights reduced by 2% due to the early effects of COVID-19 which affected arrivals particularly in our Victoria Falls properties. Domestic room nights increased by 8%, a growth that was driven by corporate and NGO business,” said the company.

The lockdown declared in Zimbabwe in March forced African Sun to temporarily close all its eleven hotels and two casinos. These have since been reopened under health restrictions.

African Sun operates the Holiday Inn Hotels, Elephant Hills in Victoria Falls, Great Zimbabwe Hotel, Troutbeck in Nyanga, Caribbea Bay, Hwange Safari Lodge, and also co-runs the Victoria Falls Hotel.

Outlook?

On the outlook, African Sun forecasts some international business to restart from July as airlines resume. However, overall, the near-term outlook remains dire for tourism.

“The group anticipates continued disruption to travel and tourism in the months ahead, and forward visibility on the timing and shape of improvements in demand remains very limited. However, the group is taking decisive action to protect the core of its business until the crisis passes and travel resumes,” says African Sun.

The company is pinning its hopes of short-term recovery on domestic business, largely driven by government and non-governmental organisations programmes centered on COVID-19 health responses and hunger alleviation.

In May, Tourism Minister Mangaliso Ndlovu said the country could lose as much as US$1.1 billion in tourism earnings, essentially its entire annual receipts, due to COVID-19.

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