TPS East Africa, the parent company of Serena group of hotels, narrowed its losses marginally by 4.7 percent in the six months to June 2019 riding on recovery of the foreign leisure market.
The hospitality chain saw its losses reduce from Sh168.6 million last year to Sh160.7 million as sales revenues grew by Sh20 million to hit Sh2.7 billion.
“During the first half of the year 2019, market sentiment has continued to indicate a consistent return of confidence from the foreign leisure market segment to Kenya and the wider East Africa region,” said the firm.
The firm adds its diversified portfolios in East Africa experienced growth in corporate and domestic leisure segments, particularly in the second quarter of the year as insecurity issues in Kenya receded.
But it cautioned investors against taking this improved performance as a basis for extrapolating a full year performance forecast, given the seasonal nature of tourism in the region.
Despite pre-tax profit jumping 149 times from Sh0.83 million to Sh124.2 million, TPS’ bottom line was depressed by adverse foreign currency exchange and depreciation costs, pulling it into net loss position.
It suffered Sh18.3 million loss on foreign currency as compared to Sh25 million gain booked in the previous year. Costs of serving foreign loans also went up to Sh84.9 million from previous half year’s Sh61.3 million. “Foreign exchange loans, coupled with adverse foreign exchange rates, resulted in exchanges losses on debt as well as relatively higher net interest charges,” TPS noted.
The long-term loans taken by TPS are Sh2 billion from Proparco, Sh550 million from Barclays Tanzania and Sh0.97 million from Barclays Kenya.
Depreciation on property, plant and equipment also rose 20 percent to Sh22.9 million as a result of capitalisation of the first phase of facelift on Nairobi’s Serena Hotel.
The facelift is set for completion by end of the year, according to the board, which expects increased revenue from this.
In 2017, TPS also refurbished Kampala and Dar es Salaam Serana hotels.