Zeda Flags Major Recovery in Inbound Tourism Market with More Than Doubled Revenue
Key Highlights :
As the world slowly recovers from the devastating effects of the COVID-19 pandemic, Zeda, the operator of Avis Southern Africa and the Budget car rental groups, has flagged a major recovery in the inbound tourism market. On Monday, the company reported that its interim revenue more than doubled in this segment as foreign travellers appeared to return to South Africa (SA).
Reporting its results for the six months to end March, Zeda said that inbound travel experienced a 138.7% surge in revenue. The company noted that its total car rental activities operated at 26.8% of the pre-pandemic levels, with inbound still lagging at just below half of the pre-pandemic levels. However, Zeda believes that there is significant room for further growth, citing the expected increase in international airlines’ activities utilising chauffeur-driven vehicles as an opportunity to grow the business further.
The corporate travel segment, which reported its first set of results since unbundling from Barloworld, also performed well. Revenue for the segment increased more than a half, helping Zeda lift basic earnings per share 27% to 197c and saw its group revenue increasing a fifth to R4.45 billion.
The car rental business as a whole continued to benefit from a diversified model which included a subscriptions business, as well as an increase in the replacement car business in the insurance segment. This, along with the recovery of inbound and corporate travel, as well as used car sales, saw Zeda's car rentals division's revenue grow 26% year-on-year to R3.3 billion.
The corporate travel segment rose 69.5%, and Zeda's leasing business remains solid with revenue growing 6% to R1.14 billion year-on-year. This was due to Zeda's decision to grow into the heavy commercial fleet vertical, as well as healthy resale prices of used vehicles and an increase in the sale of value-added products and services.
CEO Ramasela Ganda noted that while the operating environment has been challenging, the group has benefitted from its strong fundamentals and leveraged pockets of opportunity in rental and leasing to grow into less capital-intensive business such as maintenance and other value-added assets.
Zeda's positive report is an indication that the inbound tourism market is beginning to recover from the effects of the pandemic, and that foreign travellers are starting to return to SA. This is good news for the tourism industry, and hopefully, it is a sign of things to come.
