Tuesday, December 5, 2023

Luxury tour operator – Chobe, hard hit by losses

Luxury safari operator Chobe Holdings is counting its losses after Covid-19 intervention measures decimated the company’s business model resulting in wage cuts as the company tries to keep together, while waiting for the dithering government to open borders, worried that domestic tourism will not be enough to keep its high end business model sustainable despite the enthusiasm.

The Botswana Stock Exchange listed tourism and leisure company released its half year financial results for the six months ended August 2020, which showed the significant impact the pandemic has had on tourism. The company’s revenues dropped from last year’s P224 million to P17.3 million, and while expenses also decreased substantially from P110 million to P39.5 million, the end result was a huge P35.3 million, a stark contrast to P77 million recorded in the same period last year. The loss stunned the company management which before the pandemic was expecting a bumper year of profit.

“The business model of Chobe Holdings is based almost totally on high end wildlife tourism. Prior to the arrival of COVID-19 the group was anticipating its best year ever in terms of already confirmed bookings. Early in the half however, the onset of the COVID-19 lockdown brought our business to an almost complete halt from that date onwards. Revenues collapsed overnight, but many expenses remained in the form of payrolls, the cost of disposing of perishable food and beverage items, lease fees to local and central government and the necessity to secure and maintain properties and equipment in the hope of a resumption of business in the not too distant future,” the company said in a note accompanying the financial results.

Chobe owns and operates twelve eco-tourism lodges and camps on leased land in northern Botswana and the Caprivi Strip in Namibia with a combined capacity of 317 beds under the brands of Desert & Delta Safaris, Chobe Game Lodge and Ker & Downey Botswana. Sedia Riverside Hotel, a 31-room hotel owned by the group operates in close proximity to central Maun. Safari Air, an air charter operator, which provides air transport services to the group’s camps and lodges. North West Air Proprietary Limited, an air maintenance operation, which provides maintenance services to the group’s aircraft as well as third parties. Desert & Delta Safaris (SA) (Proprietary) Limited, another wholly owned subsidiary operating in South Africa, provides reservation services to the group.

The high-end resorts operator added that it was pleased by the reception it got from its campaign to attract domestic tourists at an affordable level. However, Chobe management say this will not be enough to generate cash that will support the expenses that come with providing high end service as local tourists preference is skewed towards weekend and holiday specials.

“In economic terms however, the results have been somewhat less than encouraging given the costs of mobilising staff to remote destinations and the stop start nature of tourist flows. The exercise however has demonstrated there is a strong desire to experience these areas which suggests to us as a group that we need to relook at our citizen and regional rates as well giving consideration as to how to reach out to local travel once normal trade resumes,” the company revealed.


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