eBusiness Weekly
Tawanda Musarurwa
Listed hospitality group Rainbow Tourism Group (RTG), says it will leverage on its digital platforms to enhance foreign currency generating capacities.
Although the group, generated US$11 million in foreign business from its hotel properties in 2018, group CEO Tendai Madziwanyika, told Business Weekly that the group’s two digital offering — RTG Virtual and Gateway Stream App — have gained significant traction.
RTG Virtual is a partnership platform between RTG and selected hotels in Zimbabwe, in areas where RTG has few or no properties. And the Gateway Stream App initially carries 40 non-RTG restaurants in Harare, Bulawayo and Victoria Falls, and it has at least 80 RTG Virtual Partner hotels and lodges across the country.
“Revenue from RTG Virtual was about 141 percent up to US$323 000. It’s moving very well. What we have done under Virtual is that we have got hotels and lodges that are partner hotels around the country.
“They do not have the reach into the market and globally that we do. So we have agreement where we can sell for them. It’s a very efficient way of driving the business,” said Madziwanyika.
“What it means therefore is that if we have a net revenue of $323 000 it represents about $3,5 million if it were our own hotel. It’s an efficient model, there are no costs because the sales call was always going to be done, so it’s a win-win for everyone.”
In line with the move to focus on the digital platforms, RTG management says it is also working on securing management contracts for hotels in the region.
And in this respect, the group is targeting to generate at least US$3,5 million in additional foreign currency revenue from the new business.
The group is looking to expand initially into South Africa, where some deals have since been struck, and later into the rest of the region.
“We are trying to pursue asset light approaches to business. In other words instead of looking to invest $10 million into that will pay back in 10 years, we are also saying there are a lot of opportunities in the country where people have already invested in assets but maybe its operating at 40 percent capacity, why not identify those properties and make money from those properties in a win-win kind of way. Look at Air BnB they are making money in this country, but no one has ever seen an Air BnB person.
“We now have a platform, through the Gateway Stream. We are really at the cutting edge of technology. We launched it a year ago and right now the numbers are good. We are positioning it as a gateway for travel and tourism, not only in Zimbabwe but regionally and globally.
“We are expanding it into South Africa, where we have got partner hotels in South Africa that have given us lower rates. For example, there is a group that has given us rates of about US$75 equivalent. If you were going into that same hotel you would be charged about US$175, so that means, straight away that mark-up is ours, so we can go in and sell even at a US$100.
“It’s a model that we are going to expand into South Africa and into the rest of the region, so we end up being like a booking.com of Zimbabwe or Africa,” added the RTG boss.
According to Madziwanyika, other “complementary” businesses that the group is eyeing going forward include procurement, consulting services, training chefs, outsourcing of housekeeping and front office services, just to mention a few.
“It’s a whole new business model that goes to complement our business,” he said.
For the year to December 31, 2018, RTG’s total revenue amounted to US$34 million, a 27 percent improvement from FY2017.
Foreign revenues grew 24 percent to US$11 million in the year under review, from US$8,9 million previously, while operating profit jumped tenfold to US$5,6 million from US$0,55 million in the prior comparable period.
EBITDA came in at US$9,2 million, a 115 percent improvement above FY2017.
Profit after tax for the year under review amounted to US$5 million, from just $112 000 in 2017. The board approved a dividend of 0,041 cents per share.
