BSE-listed hotel giant, Cresta Marakanelo, unveiled a strong financial performance as they released their 2023 annual report, showcasing robust revenue and significant growth. As highlighted in the annual statements from Chairman Moatlhodi Lekaukau and Managing Director Mokwena Morulane, Cresta Marakanelo has become a bellwether in the hospitality industry.
In his statement, Chairman Moatlhodi Lekaukauannounced that Cresta Ltd achieved a revenue of P400 million for the 2023 financial year, marking an increase of P44 million from 2022, which represents a 13 percent year-on-year growth. Lekaukau attributed this stronger revenue performance to their efforts to limit spending within specific budgetary limits, resulting in an operating profit of P58 million, a 28 percent increase from 2022. “The company also saw an increase in shareholder’s equity of 19 percent, rising from P142 million in 2022 to P169 million in 2023,” he said. Total assets grew by 14 percent due to increased capital expenditure on property, plant, and equipment. However, this increase was partially offset by higher lease liabilities as the company added 60 more rooms to its inventory. The Return on Equity (ROE) improved to 16 percent, compared to 14 percent in 2022, while the Return on Invested Capital (ROIC) closed the year at 10 percent, up from 9 percent in 2022.
Assessing business risk, Lekaukau highlighted the competition from Airbnb, noting a noticeable increase in Airbnb properties across the country, primarily in Gaborone. He also pointed out that inflationary pressures fueled by industry price wars remain a key risk. To mitigate these risks, the company reinvested P61 million in capital to defend its market leadership position and ensure sustainable profitability into the foreseeable future, Lekaukau mentioned. Despite these challenges, the company closed the year with a cash flow from operating activities of P88.5 million, a 54 percent increase from 2022. However, the cost of interest-bearing borrowings rose by 2 percent due to higher prime lending rates for most of 2022. Lekaukau added that to navigate these risks, the board is constantly monitoring and guiding management.
Lekaukau’s statement reveals that going into 2024, the management will continue with the refurbishment programme, to improve its product offerings. The company management also plans to strategically increase spending on repairs and maintenance of properties as well as sales and marketing costs, as deliberate investments to ensure sustainable profitability. The chairman’s statement also reveals the completion of a 50-room, 4-star Cresta Jwaneng Hotel in partnership with Debswana Pension Fund. The company also declared a final dividend payout of 4.3 thebe per share for the year ended 31 December 2023, which was paid on 30 May 2024 also revealed in the statement. Lekaukau extended his heartfelt appreciation to the staff for their commitment to ensuring profitability and thanked all customers and stakeholders for their support.
Managing Director Mokwena Morulane emphasised excellent service delivery, guided by their ethos of Botho(Humility), Botswerere (Excellence), Bonatla (Passion) and Bofefo (efficiency). Morulane said the company is deliberate in focused hotel refurbishments and return on investment driven capital rationing which enable them to compete efficiently in a competitive landscape increasingly influenced by the disruptive Airbnb model which makes entry to market cheap and easier. He elaborated on the importance of technology, stating that it is no longer a nice to have, it is now a core imperative in driving sustainably profitable business models. Cresta’s focus is on automating their daily processes and service delivery to enhance convenience for their guests and other stakeholders, using the adoption of hybrid virtual meetings as an example.
Morulane also praised Cresta’s efforts in cost avoidance and cost reduction, highlighting these as key strategies in delivering sustainable returns to shareholders. He noted that the business has leveraged its strong brand presence both within Botswana and beyond its borders, crediting its success to effective training and people development, which enable it to deliver on its brand promise. Beyond profits, Morulane revealed Cresta’s involvement in societal projects aimed at making a positive impact on the social, economic, and environmental fabric of society.
