Most businesses in the tourism and hospitality sector have been affected by the recession in one way or another with growth in the global tourism market falling to 2% in 2008 compared to 7% in 2007. African Sun has not been immune to the effects of the crisis, however we have been better prepared than most and have the lessons we learnt from our experience in what was then a very unpredictable Zimbabwean market to carry us through.
Growth in terms of new properties under management and direct ownership by African Sun has been on the increase and we maintain progress towards our goal to continue expanding our operations this year. However, our pace of growth is more metered as we source informed funding for Greenfield Projects in a capital market with limited liquidity.
In our July analyst briefing available here, we gave an outline of how close and achievable our strategic objectives are. We aim to grow the number of rooms in Africa from the current 2,500 to 8,500 by 2012 and achieve a market capitalisation of USD1billion – it is currently USD128millon.
So how are we going to get there? We currently have more than 7,000 rooms in the pipeline across Africa. In addition, over 70% of our revenues are from Southern Africa, mainly Zimbabwe where we are looking at recapitalising some of our key properties. Since the beginning of the year, 9 countries including USA and UK, have lifted travel warnings on Zimbabwe, so we foresee more growth coming from that market. We have also seen an increase in the number of visitors to our hotels coming from aid agencies and prospective investors.
While some of our properties are in the ‘leisure enclaves’, many are also in the resource rich regions such as Nigeria and Ghana (which is expected to become an oil producer by 2011). The long term fundamentals driving economic growth in these focus regions are highly likely to remain unchanged and this in turn ensures a consistent flow of guests from the business and leisure markets.
Despite the recession, our private placement has generated an incredible amount of interest and we are confident that we can meet our target of USD60million. I believe that this, combined with our interest in listing on the JSE’s Africa board, is a solid position from which to weather the impact of the global recession.
Shingi
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