Cresta suffers 50% fall in revenue

Cresta Marakanelo Limited Group has suffered a heavy blow on its revenues for the six months ended 30 June 2020 which slumped by P94.5 million (50%).

According to the Cresta, the decline in revenue as compared to prior year was primarily attributable to Covid-19 related cancellations or postponements and the national lockdowns.

Cresta said its Gross margin declined significantly due to the continuance of salaries and other expenses while operations were closed or curtailed as Covid-19 brought its business to big halt.

“Other discretionary costs were contained and variable costs declined in line with the level of activity, resulting in the overall decline in earnings before interest tax and depreciation and the amortisation being contained to P40 million compared to prior year,” Cresta Group has revealed.

Cresta also said its total assets value decreased by 7% equated to half-year ended 30 June 2019.

“The decrease in assets was primarily as a result of a high level of trade and other receivables in the prior year, which related mainly to a VAT refund due on the four hotel properties acquired in June 2019. The Group had cash resources of P61.0 million (2019: P29.9 million) at the end of the period under review,” Cresta said.

Regarding cash flow Cresta revealed that during the half year, tune of P25.8 million was utilised in operating activities, mostly to fund operating expenses during the period when hotels were shut.

Net cash worth P14.4 million was used in investing activities primarily as a result of acquisition of Cresta Bosele hotel property in February 2020 (2019: P251 million of gaining of 4 hotel property).

With regards to financing activities, Cresta Group of hotels said P9 million was utilised from the loan facilities during the period to fund the acquisition of the Cresta Bosele hotel property.

Led by Mokwena Morulane as the Managing Director, the company said the Covid-19 pandemic has significantly affected the short to medium outlook of the local tourism industry.

The Group conceded that the novel Coronavirus brought in an unprecedented level of uncertainty. Covid-19 lockdowns or restrictions have an immediate impact on the group’s performance.

The management said it will continue to actively assess whether certain properties need to be temporarily closed to reduce costs if occupancies remain subdued, as engagement with staff continues.

“Concerted efforts will also continue to market attractive holiday and retreat packages to the domestic market to drive more business to the leisure properties,” said the company.

Pako Moshaga, Credit Manager and economic specialist from BancABC Botswana, reiterated that local tourism promotion should be at the core of local tourism and hospitality industry players. 

Giving insight on Economic Recovery and Transformation Plan (ERTP) as rolled out by government recently, Moshaga stated that government should also extend wage subsidy for tourism sector. He said a wage subsidy should be considered because the closure of borders due to restriction in movement as result of Covid-19 barred international tourists hence the tourism sector is losing big.