The newly opened Maun Hotel contributed little to boost revenue for the listed hospitality group – Cresta Marakanelo Limited. Group financial results for the half year period released on Thursday this week shows that, without taking into consideration the new operation, Cresta revenue increased by 4 percent.
Cresta Managing Director, Mokwena Morulane, says occupancies at the new hotel are still very low and as a result, the hotel has been incurring losses.
The new hotel impacted negatively on the overall group’s profit before tax for the half year, with the group registering a loss of P3.9 million, compared to the prior year loss of P2 million. Maun hotel is anticipated to continue struggling for some time and negatively impacting on the group performance in the short term.
Despite an expected improvement in the second half of the year in performance, Cresta still anticipates net profit for the full year period to be below last year’s performance.
In response, Morulane says they have put in place a number of initiatives to improve the performance of this hotel and also increase the contribution of the leisure market to the company’s customer base, which is heavily skewed towards business travellers.
“There will be a focus on improving margins, as well as product improvement across all hotels. The Cresta Mowana Resort & Spa refurbishment is currently underway,” Morulane said.
This will be substantially completed in October 2018, with the final bedroom block due to be completed during the first quarter of 2019, Morulane announced. The Cresta Jwaneng refurbishment is also underway and will be substantially completed by the end of this year.
The next proposed refurbishments are for Cresta Riley’s and Cresta Botsalo hotels during the first half of 2019. Another factor that contributed to the increase in losses is property rental expenses which are reported to be increasing ahead of inflation.
In Zambia where the group also has operations, performance there is said to have been affected by the outbreak of cholera in the Zambia capital, Lusaka in the first five months of 2018.
The outbreak of the disease is said to have adversely affected the hotel operations as the Zambian Ministry of Health banned large gatherings of more than five people in order to stop the transmission of the bug.
In the first half of 2018, Cresta group recorded a profit of P3.4 million compared with P7.2 million seen in the same period last year.
Cresta board of directors led by Moatlhodi Lekaukau has this time around decided against declaring an interim dividend, and has instead chosen to fund the refurbishment currently underway and new products in the pipeline. The group is currently exploring local and regional growth opportunities in order to diversify its portfolio and increase shareholder value.