Covid drains N$174m from NWR coffers

The state hospitality entity’s recent hopes of marching towards profitability have been dashed.

03 May 2021 | Tourism

ELLANIE SMIT







2019/2020 financial results:

· Occupancy at 21%

· 56% reduction in revenue

· 1% increase in expenses





WINDHOEK

While Namibia Wildlife Resorts (NWR) battled one of the most difficult years in the tourism industry, the company made a loss of N$174 million during the 2019/2020 financial year.

NWR chairman Leonard Iipumbu said the significant milestone NWR reached by recording its first ever profit of N$22 million since the establishment of the organisation as well as other financial gains made in 2018/2019 were wiped out due to the Covid-19 pandemic.

He made these remarks at the company’s annual general meeting last week, which was held in compliance with the Public Enterprise Act.

During the meeting, the shareholder was represented by public enterprise minister Leon Jooste and the newly appointed deputy minister of tourism, Heather Sibungo.

In presenting its results to the shareholder, Iipumbu said during the 2019/2020 financial year, the company faced its greatest challenges as an organisation.

NWR spokesperson Mufaro Nesongano explained to Namibian Sun that the 2019/2020 financial results must be understood and interpreted within the context of a tough year due to the impacts of the pandemic.

“This was the biggest challenge in the history of the Namibian tourism industry in general and NWR in particular.”

Decline

He said NWR’s average occupancy declined from 49% in 2019 to 21%.

This was, however, better than the 10% worst-case scenario they had anticipated when the pandemic broke out.

The company furthermore had a 56% reduction in revenue, from

N$395 million in 2019 to N$173 million, mostly - if not all - from the domestic market, Nesongano said.

“We had a 1% increase in expenses, mainly due to the voluntary separation costs for the 130 employees who left us.”

According to him, this then resulted in a comprehensive loss of N$174 million, which is in line with industry trends for 2020.

However, according to Nesongano, for it to sustain its operations, which resulted in it not retrenching or reducing its employees' salaries except for its board's allowances and senior management salaries, the company needed to be innovative to survive.

"We were the first organisation to offer our establishments to the government as isolation facilities. We must say this was an arrangement few tourism companies were looking at during that period,” Iipumbu said.

Additionally, the company paid special attention to the domestic market, which resulted in offering a discounted rate of N$600 per room from May until September 2020.

“That was a significant discount on our normal rack rates. Through this effort, we were able to keep the business going and provide a much-needed service to the nation. We also launched a new tour package that we envision will be one of the cornerstones of our future," Iipumbu said.

Cost cutting

Nesongano added that from a cost-cutting perspective, NWR signed a Memorandum of Understanding (MoU) with the Namibia Public Workers Union (Napwu).

The agreement resolved, amongst other things, to suspend salary increments for the 2019/2020 financial period, suspend normal overtime, Sunday and public holiday payments, and other allowances and benefits from 27 March 2020.

Additionally, it also resolved to place a moratorium on external recruitments to ensure that the company's wage bill remained manageable. NWR also introduced a voluntary separation initiative, which 130 staff members took up.

“These efforts were aimed at helping reduce employee costs,” Nesongano said.

Meanwhile, NWR managing director Matthias Ngwangwama said during the period under review, the Namibia Wildlife Resorts Hospitality Institute (NWR Hi) was successfully established.

In collaboration with the National Training Authority (NTA), NWR's training arm, NWR Hi was operationalised last year and scholarships were awarded to 80 apprentices sourced from across Namibia for the period 2020 to 2023.

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