Higher revenues, strong shilling lift Serena hotels operator back to profitability
TPS Eastern Africa, known for its Serena brand of hotels, swung back into profitability in the six months ended June 2024.
TPS Eastern Africa Plc, operator of the Serena hotels brand, swung back into profitability in the six months ended June 2024, posting a net income of Sh570.9 million compared to a Sh30.2 million loss previously.
The rebound for the hospitality firm was supported by higher revenues in the period, alongside gains from a stronger local currency which saw reduction of the Group’s dollar-denominated liabilities including debt and interest costs.
The firm’s turnover marked a 20.4 percent increase in the half-year to June to Sh4.53 billion, up from Sh3.75 billion in the previous year.
The revenue growth was anchored on increased travel for leisure and conferences from both traditional and new markets.
“Feedback from suppliers of business from both traditional and emerging international source markets has been encouraging, witnessed by an increase in the demand for leisure, corporate and meeting, incentives, conferences, and exhibition (Mice) business. Ongoing facilitation by respective governments to promote East Africa as a destination, for instance, Royal Tour Tanzania, has paid off,” TPS Eastern Africa said in a trading statement on Thursday.
“This indicates sustained confidence in the foreign leisure and corporate sectors, showing positive business trends from the domestic and regional markets.”
Appreciation of the Kenyan Shilling against the dollar over the six-month period led to a non-cash unrealised exchange gain of Sh453 million on the company’s US dollar-denominated debt.
TPS’ net interest costs also declined to Sh169.9 million from Sh201.9 million previously on the stronger local currency.
The Group’s total operating expenses, however, rose significantly due to employment-related expenses, energy, and property maintenance costs which went into sustaining operational standards and preserving guest satisfaction.
TPS Eastern Africa Plc has maintained a cautiously optimistic view for 2024 despite headwinds including political uncertainty, security concerns, high interest rates, currency fluctuations and inflation.
The firm, however, sees future growth due to transformation of its regional business through revenue maximisation, technological infrastructure upgrades, human resource development, and enhancing guest facilities and comfort.
“Management will continue to pursue investments for the upgrade and refurbishment of the group’s hotels, resorts, and lodges including technological upgrades and upskilling of associates in order to remain competitive,” TPS added.
Given the expected investments, the TPS Board of Directors has not declared an interim dividend for the period, highlighting the need for cash conservation and debt reduction.
