Harare — HOTEL group Rainbow Tourism Group (RTG) has posted a $22 billion after-tax loss, in inflation adjusted terms, for the financial year ended December 31 2004.

The listed leisure services company said the operating environment was not conducive for profitability as an upsurge in tourist arrivals the world over did not filter down to the local tourism industry which instead experienced a decline in arrivals compared to the prior year.

RTG cited the negative image of the country (peddled by a hostile international Press), lack of direct flights from some markets and Western perceptions that Zimbabwe was not a safe tourist destination as some of the factors contributing to the decline in tourist arrivals.

"The year under review was one of the most challenging for the group. There was a further contraction of the economy in a particularly difficult economic and operating environment.

"While tourism statistics for 2004 indicated an upsurge in tourist arrivals in most countries, statistics for Zimbabwe indicate a further downturn from the previous year. Arrivals into the country declined by 29 percent over the year," RTG said in a statement accompanying its financial results.

Other factors cited by the group as having impacted negatively on profitability were rising payroll costs and wages that grew at a much higher rate than revenue.

RTG said operations were also weighed down by an interest burden stemming from funds borrowed for the refurbishment of the group's Bulawayo Rainbow Hotel, which is expected to reopen for business soon.

The group said for the last financial period under review, although revenue went up by 274 percent to $99 billion, this did not translate into profit- ability.

Consequently, the hotel group's basic earnings per share stood at a negative $5 096.

RTG was, however, optimistic about the future and was already reorienting its operations to position itself for a profitable 2005 as the economic and operating environment landscape was showing signs of improvement.

"While it is acknowledged that the country is still to recover from the negative image that exists in major source markets, it is expected that that such perceptions will thaw as the year progresses," said RTG.

The RTG group is made up of Sheraton Harare Hotel and Towers, Rainbow Mercure Hotel, Touch the Wild Safari Lodges and Tourism Safaris Zimbabwe.