Saturday, November 28, 2020

Tourism giant records massive drop in revenue

The high-end tourism operator Chobe holdings is expecting a loss in a usually lucrative sector, with the latest development reflecting the massive impact Covid-19 containment measures have had on companies reliant on travel.

The Botswana Stock Exchange listed company announced on Thursday that financial results for the half year ended August 2020 will reflect a loss, with profit before tax projected to drop by nearly 145 percent, wiping away between P147.2 and P152.4 million from the P105.1 million recorded in August 2019.

Tourism has been one of the hardest hit sectors in the economy, following the government’s decision to ban international travel in April in a bid to contain the spread of coronavirus. The majority of travellers who frequent Botswana’s high-end safari resorts are from the USA and Europe, two of the hardest hit regions by Covid-19.

Chobe owns and operates, through its wholly owned subsidiaries, 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, a wholly owned air charter operator provides air transport services to the group’s camps and lodges. North West Air Proprietary Limited, a wholly owned air maintenance operation 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 expected loss is a reversal from impressive set of results released earlier this year. Chobe reported a 19 percent jump in profit after tax in its financial year ended February 2020, registering P97.3 million. By then the company was starting to comprehend the impact of the pandemic,  revealing that performance in 2020 will be restrained, and only expecting recovery in 2021.  According to the World Tourism Organisation, the COVID-19 pandemic, the illness caused by coronavirus,  has resulted in 22 percent fall in international tourist arrivals during the first quarter of 2020 and the crisis could lead to an annual decline of between 60 percent and 80 percent when compared with 2019 figures.

“It is anticipated that signs of recovery will start emerging in the last quarter of 2020 but mostly in 2021 with leisure tourism expected to recover quickly. The recovery is however dependent on containment of the virus, easing of travel restrictions and reopening of borders,” said Chobe’s managing director Rodney David Gibson  in the company’s annual report for 2020.

“The marketing push of ‘don’t cancel, defer’ has been largely successful with more than 70 percent of the confirmed bookings that were scheduled to travel in the period April – June 2020 deferring their travel to 2021. Your Directors are therefore confident of a fairly quick recovery when it is deemed safe for international travel to resume,” he said.

Gibson disclosed that Chobe’s strong cash and no debt position provides it with the ability to ride out the COVID-19 virus and the opportunity to take advantage of any expansion opportunities that may arise. However, the company’s directors have elected to defer the declaration of a dividend until such time as the group’s earnings potential is restored and cash flow allows.

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