TPS Eastern Africa, the operator behind the esteemed Serena Hotels brand, has reported a net profit of $3.4 million (Sh379.7 million) for the year ending December 31, 2022. This impressive turnaround follows a previous loss of $5.7 million (Sh639.1 million) in 2021 due to the Covid-19 pandemic’s impact on the hospitality industry.
The company’s first profit since the pandemic is a testament to its resilience, having navigated the challenges brought on by pandemic-related restrictions that severely affected the hospitality sector. In a trading statement, TPS Eastern Africa noted, “Despite the turbulent start to 2022 due to the Omicron Covid-19 variant outbreak, the second half of the year saw promising signs of improvement in business inquiries across most of the Group’s market segments.”
The hotel chain’s recovery is attributed to a resurgence in foreign corporate and leisure business, supplementing growth in domestic and regional markets. Revenues more than doubled as contracts with customers surged to $62.1 million (Sh6.94 billion) from $29.4 million (Sh3.29 billion) in 2021.
However, TPS Eastern Africa also experienced an increase in unrealized foreign exchange losses, spiking to $2.8 million (Sh312.1 million) from a backdrop of weaker local currencies. These losses were partly offset by reduced finance costs, which fell to $2.45 million (Sh274.5 million) from $2.53 million (Sh283.3 million) previously.
Depreciation on the right of use assets and property and equipment also eased during the period, supporting the recovery in earnings. The company’s tax contributions in Kenya, Uganda, and Tanzania rose to $19.6 million (Sh2.2 billion) in 2022 from $7 million (Sh783 million), reflecting improved profitability.
The board of directors remains cautiously optimistic for 2023, with hopes to return to pre-pandemic growth levels. They acknowledge that global macroeconomic concerns could impact the recovery of global tourism in the coming months.
In light of the uncertain outlook for 2023 and plans to invest in product improvements and business recovery, the board has decided against paying dividends. TPS Eastern Africa aims to “continue pursuing management contracts in strategic locations to further complement Serena’s established regional brand presence and portfolio in Africa.”