Covid-19 squeezes tourism counters
Malawi Stock Exchange (MSE)-listed counters in the hospitality sector have registered drop in profits and share prices as a direct impact of the Covid-19 pandemic, an analysis from the local shares market shows.
Blantyre Hotels Limited (BHL) has since issued a statement showing that its revenue for the half-year period ended March 31 amounted to K545 million which was 69 percent below the revenue realised the previous year.
The statement said the hotel’s occupancy averaged 11 percent during the period compared to 52 percent in the previous year, a development the firm has linked to the impact of the Covid-19 pandemic in the hospitality industry.
Similarly, Sunbird Tourism plc, in a trading statement issued on Wednesday this week, said it expects to make a loss for the half year ended June 30 2021 estimated at 65 percent lower than the previous corresponding period.
On the other hand, the stocks have also experienced a share price fall. Sunbird share price dropped by K15 to K90 from K105 earlier this year while BHL share price dropped from K12.94 to K11.
Meanwhile, minority shareholders have lamented the share price fall registered in the stocks, saying the development has eaten into their investment value.
In an interview with Business News on Tuesday, Minority Shareholders Associations of Malawi secretary general Frank Harawa described the drop in share prices as a serious pain to shareholders.
He said: “The capital gains that shareholders made over time have been eroded now through this. In the current scenario, it is even difficult for these companies to pay dividends because they are not performing well at all.
“Our hope is that as the country has started administering the vaccine, very soon the Covid-19 issue will be history and things will normalise, including trade by the most affected companies.”
Earlier, Cedar Capital Limited indicated that Sunbird’s asset-heavy business model means profits are more vulnerable to drop in volumes and it could take time to regain previous profitability levels going forward.
The firm observed that Sunbird Tourism plc has its share price down to nearly 40 percent from the 2018 peak of K145, an indication of the extent of the pandemic.
Malawi Tourism Council chairperson Johns Malili admitted that tourism sector continues to be affected by the Covid-19 pandemic and that this year, growth in the sector will be subdued.
By mid-2020, Malawi lost over K42 billion in revenue through cancellation of confirmed bookings and lost an estimated 300 000 jobs out of which 253 000 were direct jobs following the Covid-19, according to the 2021 Annual Economic Report.
