Umodzi turns around President Hotel’s fortunes

The Umodzi Holdings Ltd is a 100 percent government shareholding business that has been around since 2012. It comprises the President Hotel, the Bingu International Convention Centre (Bicc) and The Presidential Villas. It was built with $100 million loan financing from the Chinese government. The business had been making losses up to the last two financial years when it registered a profit of K413 million and later another profit of K1.2 billion in the 2022/2023 financial year. The President Hotel has just been awarded the best hotel in the country by World Travel Awards. Our reporter JACOB NANKHONYA caught up with the Umodzi Holdings Ltd chief executive officer of STEVE LWANDA, and had this conversation. Excerpts:

Briefly tell us about Umodzi Holdings Ltd.

Umodzi Holdings Ltd was incorporated in 2012. It is owned by government, one percent Ministry of Tourism and 99 percent by Ministry of Finance under the Treasury. The company had never registered profit until the 2021-2022 financial year when it made a profit of K413 million. In the 2022/2023 financial year we recorded a profit of K1.2 billion. I believe that as a company we haven’t really reached our potential especially on the conference facility side. It’s two-fold now to ensure that the business should increase on the conferencing side while we maintain on the hotel side and then we expand. We are hoping that this financial year we are also going to double profits from K1.2 billion because as we speak we are already at K1.1 billion.

What has been your turnaround strategy?

Three things; we ensured that there is delegation of authority across the board. We had to respect responsibilities according to positions, not everyone could do everything as they please. We also had to go for cost containment. We had to go for the best available cost and also the most efficient and effective way of doing things. Finally, we decided to widen our market. We decided that we just didn’t have to grab everything that comes our way. There are some clients who can give big business but take too long to pay, we had to find a way of dealing with them while we also focused on corporate clients who, we found out that, pay for the service for its value. We had to go for the niche market that suited us.

Moving forward, what are your plans?

We intend to expand business. We have been looking at a few things. The board has already approved that we operate a casino, we are in preparatory stage. We applied for the licence and it was granted and now we are working on some dos and don’ts. Hopefully, this will start around March next year. Umodzi Park is sitting on 37 hectares of land. Of course, there is a master plan on that, but we want to develop a theme park for children. We also want to be using a third-party who will be coming to operate goal carting/small racing cars, they will be using the Malawi Square. This was supposed to start in October but there were a few teething issues that are being taken care of. The last-quarter of this financial year they should be starting. The other thing is to utilise the amphitheater where we want to utilise it fully. We are also looking at establishing our presence at the lake. We want to build a facility there. We are talking about a facility that can host, let’s say, 5 000 people in conference. In that way big businesses that are held here in Lilongwe can go to the lake.

  I understand that this whole establishment was born out of a loan from the Chinese government totaling $100 million. Where do we stand with that loan?

Government, as a shareholder, built this thing. That was an arrangement between governments. That was an agreement between the shareholder and the financiers. We as the employees all we know is that we have this facility to run so when the facility was in place there was a need for working capital. 

So, how did you raise the working capital?

A loan was taken from Afrexim Bank and was later transferred to CDH Bank but guaranteed by government who, as a shareholder had the responsibility to provide working capital.

Therefore in 2012 we had a government guaranteed loan which was not being serviced. By September last year the loan was at K4 billion and I consulted the board and requested that we start doing something about it. This far we are remaining with K900 million, we have already paid K3.1 billion. 

 We are coming from the period of Covid-19 and the cyclones on the local scene, how have these affected business?

There are two things. One, the kind of facilities that we have are more suitable to the post Covid-19 business environment. These are such as virtual meetings option, spacious rooms which accommodate social distance as prescribed by Covid-19 prevention measures. This therefore worked to our advantage.

Over and above the business model of Umodzi Holdings was well suited in such a way that the villa side has supported the mainstream business. Business was down and the main income was coming from the villas. With the villas, the overheads are not big as such they supported the business a lot. 

Are you satisfied with the business landscape?

The landscape is not that bad, suffice to say that there is more that can be done. We are just looking forward to what the future holds. Government, alongside the Ministry of Tourism, is working on the formation of a convention bureau. The bureau works in such a way that it is a government establishment which brokers business from the international market.

What does it take for a country to have a convention bureau?

Responsible ministries just need to come forward and form one. The bureau takes business out there and decides as to who takes that business.  There are international clients such as the United Nations who prefer not to deal with individual establishments but rather the convention bureau.