Cresta Marakanelo Limited, the hotel group operating in Botswana and the region, has reported a decline in profitability in the first half of the year as it had to the deal with less travelers and competition in the markets where it operates.
The Botswana Stock Exchange (BSE) listed company saw its group profits after tax fall to P5.1 million in the half year period ended June, 2014 from P7.4 million recorded in the prior year.
The decline was blamed on the group business performance for the half year, which was done against a backdrop of ‘a notable decline in profitability of the group from 2013′.
Cresta said the group revenues registered a 8.5 percent increase from P129 million to P140 million, but were affected by Golfview Hotel Ltd in Zambia, which saw its topline decline by 26 percent from P12.6 million to P9.3 million.
“Zambia’s depressed revenue were largely due to the emergence of competition in the Lusaka area and reduced NGO business,” said a statement accompanying the results.
The company also blamed the fluctuations on the exchange rate where the Kwacha weakened against the Pula. The loss had a P2.3 million impact on the current earnings of the Zambian operation.
“It should be noted that the operation has got a Pula denominated loan facility with Cresta Marakanelo Ltd and thereby the weakening of the Kwacha or strengthening of the Pula, can cause some foreign exchange loses.”
Cresta noted that the Botswana operations experienced a slow start to the year while the second quarter came strong and gained grounds. It added that most of the growth achieved from local operations was a result of the second quarter.
“The second quarter experienced more travelers to most parts of the country thereby utilising our facilities with a notable improvement to Cresta Mowana Safari Resort and Spa,” the company said.
“The period under review saw hotels in Botswana experiencing difficult conditions, with a decline in local business in the first quarter of the year.”
Botswana remains where the meat of the group is at constituted 91.6 percent of hotel group capacity with occupancies rising 3.6 percent from 57.9 percent to 61.5 percent. “This performance was achieved at the back of a disappointing first quarter of the year. Revenue growth was driven mainly by the group’s volume based strategy under which the group drove capacity utilisation and regaining lost market share.”