Africa-Press – Botswana. Cresta Marakanelo Limited has recorded revenue of P384.7 million for the 2024 financial year, reflecting a 4 percent year-on-year decline from P400.2 million in 2023.
This is according to the Group’s latest Integrated Report 2024, which attributes the P15.5 million drop largely to weaker performance in business hotels.
“The performance was primarily impacted by reduced occupancies in our business hotels, which account for 77 percent of total room inventory,” says Chairman Moatlhodi Lekaukau in the report.
Cost optimisation
“The slowing economic growth and the inherently high operating leverage of the industry further contributed to a decline in profitability.”
According to Lekaukau, the company responded with cost optimisation measures aligned to current revenue-generation capacity and is pursuing market diversification strategies.
“In response to evolving market conditions, the company intensified its digital marketing initiatives to attract corporate and international travellers,” he says. “These efforts yielded positive results, contributing to an increase in foreign business.”
Room expansions
Administrative and operating expenses rose slightly from P100.5 million to P101.6 million, mainly due to “additional lease-related costs associated with 60 new rooms at Cresta Mahalapye and 49 upper midscale rooms at Cresta Grande Jwaneng”.
Launched in December 2023, the Cresta Mahalapye expansion increased that hotel’s room inventory by 94 percent, while Jwaneng’s grew by 75 percent.
Depreciation expenses rose by 18 percent to P33.5 million, from P28.5 million in 2023. “This increase was primarily driven by refurbishment and expansion projects, with capital expenditures of P61 million in 2023 and an additional P46.5 million in the current year,” says Lekaukau.
Lease liabilities
“The front-loading of lease liabilities arising from additional leased rooms, renegotiated leases, and renewed lease agreements resulted in right-of-use asset depreciation and lease finance costs exceeding actual lease payments by P8.6 million.”
Finance income declined completely, as the company liquidated short-term investments to meet working capital needs.
Despite securing an additional P34.5 million in borrowings during the year, Cresta reduced its interest-bearing debt to P176.7 million from P203 million in 2023.
Reduced finance costs
“The capital repayments and reduction in the prime lending rate – from 6.26 percent to 6.01 percent – resulted in the finance costs on interest-bearing borrowings decreasing by 15 percent,” says Lekaukau.
He highlights the Group’s cash efficiency, reporting an EBITDA-to-cash conversion ratio of 104 percent (2023: 108 percent). The company contributed P0.4 million in corporate income tax, down from P4.7 million the previous year.
Looking ahead, Cresta plans to focus on “enhancing cash generation efficiencies and guiding the company back to its previous year’s profitability levels,” says Lekaukau.
Cresta is also “exploring regional expansion opportunities and enhancing its leisure portfolio”.
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