Chobe Holdings, the Botswana Stock Exchange (BSE) tourism entity, saw its profit shooting up by 66.4 percent at the back of the revival of Livingstone, Zambia, as the tourism magnet.
According to the full year results to the end of February this year, profit after tax bubbled to P 17.3 million or 66.4 percent from P10.4 million in the previous year. Revenue stood at P69 million against P 51.9 million in the past year.
“There has been significant improvement in the occupancy rate and the forward bookings,” an analyst at Investec Asset Management, Alphonse Ndzinge, said last week.
The Zimbabwean factor has been neutralized and Livingstone is becoming an important factor in terms of tourism,” he added.
His comments fall in line with African Alliance research note entitled “Livingstone, I presume?” released this week.
“The group continues its successful turn around in a buoyant environment that favours all key drivers. The revival of Livingstone as a tourist destination should provide a healthy spillover into the Okovango/ Chobe area,” said Richard Mhango, an analyst who attributed the resurgence of the company to the revival of Livingstone as a tourist destination. “Chobe is well positioned in terms of capacity and geographical spread within the potential spillover region in the Okavango/ Chobe area.”
The current tourism boom at Livingstone is supported by Victoria Falls which falls between Zambia and Zimbabwe.
Two years ago, following the eruption of Zimbabwe economic and political crisis, Zambia has been burning a lot of money in trying to prop-up its tourism sector that was affected by negative perception of the region as a global tourist place.
Livingstone, which is some 80 kilometers from the resort town of Kasane, has an international airport and some world class hotels and currently boasts some rich international tourists from Western Europe and Japan.
The revival of Livingstone as a tourist destination may also affect the air transportation from some of the regional tourists’ destination such as Johannesburg and Cape Town as tourists opt to fly into the Zambia town and then connecting to Kasane through small plane.
That may come about if Air Botswana does not sort-out its constant flight problems.
Further, the research note pointed out that the spillover will benefit Chobe region largely because of the geographical proximity and the pula exchange rate against the greenback.
“The upward trend in revenue was given further impetus by 10 percent depreciation in the Pula on average of P5.76 against the US dollar in the half year under review. With the crawling peg exchange rate mechanism intended to guard against significant overvaluation of the pula, our analysis projects a bright horizon for Chobe as supported by the current inflation differential given the counters disproportionately higher sensitivity to the currency exchange,” the research note said.
“We remain convinced that of a positive short to medium term outlook. On the basis of the aforementioned, we have adjusted our earnings forecasts upwards, and project a Full year 2007 earning per share of 26.33 thebe.”
The group has operations in Botswana and neighbouring countries with a total of 254 beds at an occupancy rate of 48 percent.