Hospitality group Rainbow Tourism Group is set to implement a number of growth strategies after resolving most of the legacy issues that were weighing down the business. RTG chief executive Mr Tendai Madziwanyika, who took charge of the group four years ago, said over the period they had successfully reduced staff costs, centralised procurement for all their hotels, which has resulted in huge saving and growth of the business. "When we came in 2012 we had 1 143 employees and today we have 670 employees, we halved the number of employees including senior management, which has seen our pay roll come down from $13, 9 million to $10,7 million.
"So we reduced our annual payroll burden by $3,2 million annually. On procurement, when we came in each hotel was buying for itself but we pushed for centralisation of procurement and we continued to get savings every year and now we have cumulative $2 million in saving. "This has seen our food cost of sales coming down from 26 percent to 23 percent in an environment where food prices are going up, beverages were on 28 percent cost of sales and now 23 percent and rooms profitability was 78 percent but is now at 82 percent. "This is a mainly because of better procurement and lower staff numbers," he said.
He added that they had also managed to pay off major creditors including Afreximbank's $6 million and PTA bank's $3,5 million except for $2 million owed local banks and $13,6 million to NSSA. The group also successfully pulled out of Mozambique, liquidated Matesi and wound up operations in Beitbridge. Mr Madziwanyika said that they feel that the business is now in a position to grow hence the plan to implement at least six growth strategies. "The first is that we want to organically grow the business. We do not need to look outward but in ward for growth because for instance right now A'Zambezi is full. A'Zambezi is 87 rooms we can increase that with the space we have.
"For instance the arrival of Kenya Airways in Victoria Falls will enable tourists visiting Masai Mara, Serengeti, Ngorongo Crater and Mombasa to spend two nights in Victoria Falls and the same goes for those tourists from Cape Town. It gives us huge potential to package and increase numbers," he said. The second strategy, he said involved increasing the number of rooms under RTG Virtual and explore other revenue streams by offering partners training of staff and doing procurement for them.
He also said that they want to ensure better use of ICT to market their brand and products. Meanwhile RTG posted a loss of $4,6 million for the period ending December 31, 2016 on the back of declining revenue which fell 11 percent to $24,1 million due to exogenous factors in the country. The company Revenue per Available Room (RevPAR) declined 12 percent from $41 in 2015 to $36 by December 31, 2016.
Source: All Africa