TPS Eastern Africa Plc, the operator of the Serena Hotels brand, has swung back into profitability for the six months ended June 2024, posting a net profit of Sh570.9 million compared to a loss of Sh30.2 million previously.
The hospitality firm's recovery was aided by higher revenues in the period, as well as gains from a stronger local currency, which reduced the group's dollar-denominated liabilities, including debt and interest costs.
The company's revenue for the six months to June rose 20.4 percent to Sh4.53 billion from Sh3.75 billion a year earlier.
Revenue growth has been anchored on increased leisure and conference travel from both the group's 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.”
The strengthening of the Kenyan shilling against the US dollar during the six months resulted in a non-cash unrealised foreign exchange gain of Sh453 million on the company's US dollar denominated debt.
TPS's net interest expense also decreased to Sh169.9 million from Sh201.9 million due to the stronger local currency.
However, the Group's total operating expenses increased significantly due to labour, energy and property maintenance costs to maintain operational standards and guest satisfaction.
TPS Eastern Africa Plc remains cautiously optimistic for the full year 2024, noting headwinds such as political uncertainty, security concerns, high interest rates, currency volatility and inflation.
However, the company sees tailwinds for its future growth, including the transformation of its regional business through revenue maximisation, technological infrastructure upgrades, human resource development and the improvement of 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 to remain competitive,” TPS added.
In view of the anticipated investments, the TPS board has not declared an interim dividend for the period, emphasising the need to conserve cash and reduce debt.
