• Kadoma Hotel’s 300 kVA solar plant generated 270,984 kWh in 2025, supplying 30% of the property’s electricity and cutting the energy bill by 31%
• The group will now install a 2 MW grid-tied solar plant at Rainbow Towers (monthly electricity bill ≈ US$50,000)
• RTG is ahead of its domestic peers but still trails regional leader Sun International, the next gap RTG must close is wheeling

Harare- Rainbow Tourism Group will place every hotel in its portfolio on solar power by the end of FY2027 after the 300KVA installation at Kadoma Hotel and Conference Centre supplied about 30% of the property's electricity requirements and reduced energy costs by 31% during 2025. The next phase moves the programme to Rainbow Towers Hotel and Conference Centre, the group's largest electricity consumer, where power costs average about US$50,000 a month, before extending across the remaining estate.

The progression changes the commercial importance of the investment. Kadoma demonstrated that solar generation could remove a meaningful portion of hotel operating costs without disrupting guest services or requiring changes to the operating model. Rainbow Towers will test whether the same economics remain attractive at substantially larger scale. The project therefore becomes less about renewable energy and more about whether RTG can permanently reset one of the largest controllable costs within its hospitality portfolio.

Management's decision follows a year of measured operating performance rather than projected savings. The Kadoma installation generated 270,984 kilowatt hours during 2025 while supplying approximately 30% of the property's electricity requirements. The outcome reduced the hotel's electricity bill by 31%, providing the first operating evidence that self generation could materially improve property level profitability. Rather than treating that performance as an isolated success, management has chosen to use it as the investment case for a larger installation at Rainbow Towers.

The distinction is important because energy has become a structural operating cost for hotels across Southern Africa. Hotels consume electricity continuously. Guest rooms require lighting, hot water, air conditioning and connectivity. Kitchens operate throughout the day. Conference facilities, lifts, refrigeration systems, laundry operations and security infrastructure cannot be switched off when electricity prices rise. Unlike discretionary expenditure, power consumption forms part of the minimum operating requirement needed to sell every occupied room.

That makes electricity different from many other hotel expenses. Revenue fluctuates with tourism demand, conference bookings and seasonal travel patterns. Electricity tariffs move independently of occupancy. Hotels therefore carry an operating cost that continues rising even when guest numbers weaken. Every unit of electricity generated internally removes expenditure that would otherwise recur regardless of whether occupancy stands at 40% or 80%.

The first half financial performance illustrates why management is directing additional capital toward cost efficiency.

Revenue increased 29% to US$26.8 million during the six months ended June 2026 while EBITDA more than doubled to US$5.4 million. EBITDA margin expanded from 11% to 20%, with gross margin increasing from 68% to 75%. The group attributed the improvement to stronger trading, pricing discipline and tighter operational control. Solar generation increasingly becomes part of that operating discipline because every kilowatt produced internally reduces dependence on electricity purchased from the grid or generated through diesel backup.

The benefit extends beyond the utility bill. Reliable electricity protects almost every revenue generating activity inside a hotel. Restaurants depend on refrigeration, lighting and kitchen equipment, guest satisfaction depends upon functioning lifts, air conditioning, internet connectivity and water systems. During periods of supply interruption, electricity ceases to be only a cost, it becomes a determinant of whether revenue can be earned at all.

Rainbow Towers places those economics under greater scrutiny than Kadoma. The flagship property consumes approximately US$50,000 worth of electricity every month, equivalent to around US$600,000 annually. Management plans to construct a two megawatt grid tied solar plant capable of generating about 2.94 million kilowatt hours each year, moving the programme into a property carrying one of the group's largest energy bills.

Management's objective extends beyond reducing electricity costs at individual hotels. By the end of FY2027, every RTG operation is expected to have a solar installation appropriate to its demand profile. The rollout therefore becomes a portfolio wide restructuring of the group's energy cost base, with each completed project reducing exposure to grid tariffs, diesel generation and electricity supply disruptions.

The scale changes the financial arithmetic. If Rainbow Towers were to achieve cost reductions comparable to Kadoma's 31%, annual electricity expenditure could decline by about US$186,000 before considering avoided diesel consumption, future tariff increases and revenue protected through improved operational continuity. Actual returns will depend on plant utilisation, weather conditions, maintenance costs and the commercial terms governing electricity supplied into and recovered from the national grid. Kadoma established the operating benchmark. Rainbow Towers will establish whether that benchmark remains achievable at flagship scale.

The demand profile strengthens the investment case. Hotels create substantial electricity demand during daylight hours through conferences, restaurants, administration, laundry operations and guest services. A larger proportion of electricity generated by the solar installation can therefore be consumed immediately instead of being exported into the network. Direct consumption improves project economics because each unit generated replaces electricity purchased at the full commercial tariff.

The group also intends using grid banking to improve system efficiency. Electricity produced beyond immediate daytime demand will be supplied into the national network before being drawn back during evening periods when hotel consumption exceeds solar generation. The arrangement reduces dependence on battery storage while allowing part of the daytime surplus to offset later consumption.

Management expects the wider efficiency programme to remain funded through internally generated cash rather than additional borrowing. That decision reflects the broader capital discipline developed since RTG's restructuring began. Gearing has fallen from around 70% during the early restructuring years to 22%, with current borrowings increasingly supporting productive assets rather than operational survival. Solar follows the same philosophy. Cost savings should finance future efficiency investments without rebuilding leverage that management has spent more than a decade reducing.

The regional comparison shows that RTG is following a path already validated by one of Southern Africa's largest listed hospitality operators, while also highlighting how much further the strategy can still develop.

The closest benchmark is Sun International. Its Sun City resort commissioned a solar installation of about 1.5 megawatts that has generated approximately 5.8 million kilowatt hours since August 2024 and saves the group more than R8 million annually. Management has publicly stated that the project is generating returns comfortably above 25%, encouraging further investment across its South African portfolio.

The significance of the comparison is that both companies have arrived at the same commercial conclusion from different starting points. Energy is no longer being treated as a utility expense that hotels simply absorb, as it has become infrastructure capable of producing recurring operating returns long after the original capital has been invested.

RTG's 31% reduction in electricity costs at Kadoma therefore sits within a regional operating benchmark already validated by a much larger hospitality group. The Zimbabwean operator reaches that conclusion from a smaller installation. Sun International reaches it from a portfolio measured in megawatts. The commercial logic remains the same.

The difference lies in where each company now sits on the development curve. Sun International has moved beyond proving that solar works. Its current focus is expanding capacity and integrating renewable electricity more deeply into its operating model. RTG is entering that phase now. Kadoma established the operating return. Rainbow Towers will determine whether the same economics can be reproduced at flagship scale before the programme extends across the remainder of the estate.

Measured against the domestic market, however, RTG occupies a different position. Zimbabwe's listed hospitality sector has yet to produce a renewable energy programme of comparable breadth. The company therefore enters the next phase with an operating result already measured, a flagship installation scheduled and a clear implementation timetable extending to the end of 2027. That creates the possibility of developing a structural cost advantage in a market where electricity reliability and pricing continue to influence operating performance.

Every unit generated internally replaces electricity that would otherwise be purchased from the grid or produced through diesel. The value of that replacement increases when grid reliability weakens or fuel costs rise. Unlike many operating efficiencies that depend on stronger demand or higher pricing, self generation creates value simply by avoiding expenditure that would otherwise have been unavoidable.

Reliable daytime generation protects conference bookings, restaurant operations and guest services during periods when competitors may depend more heavily on diesel or face operational disruption. That reliability becomes part of the product being sold. Hotels increasingly compete on certainty of service as much as accommodation quality, particularly within the corporate conferencing market where interruptions carry direct financial consequences for clients.

The financing model reinforces the commercial case.

Management intends funding the rollout through internally generated cash rather than new borrowing. Operating cash flow reached US$5.1 million during the first half of 2026, allowing RTG to continue investing in productive infrastructure without reversing the balance sheet progress achieved during the restructuring period. A cost saving project financed through operating cash produces a stronger shareholder return than one financed through debt because future electricity savings are not offset by additional interest expense.

That discipline has become a recurring feature of RTG's investment decisions.

The group has reduced gearing from around 70% during the early restructuring years to 22%, while redirecting capital toward projects designed to improve the productivity of existing assets. Solar sits alongside room conversions, smart energy controls and water efficiency systems within a broader strategy aimed at lowering the operating cost attached to every room sold and every conference hosted.

The interaction between these projects is important. Solar reduces the cost of supplying electricity. Key card energy systems reduce unnecessary electricity consumption in unoccupied rooms. Low flow water systems lower utility demand. Together they reshape both sides of the cost equation by reducing the amount of energy required and lowering the cost of producing that energy. The combined return exceeds what any individual project could achieve in isolation.

The regional frontier now lies beyond rooftop generation.

Sun International is pursuing wheeling arrangements that allow renewable electricity generated by independent producers to be delivered through the national grid to its hotels. The approach separates electricity production from hotel property boundaries, giving operators access to renewable generation beyond the physical limitations of individual sites.

RTG has not yet reached that stage, nor does it need to.

The immediate priority remains demonstrating that Rainbow Towers can replicate Kadoma's economics at significantly larger scale. Once that model has been proven, Zimbabwe's developing framework for independent power producers and private electricity supply agreements creates a pathway toward wheeling as the market matures.

Investors should increasingly monitor electricity cost per occupied room, renewable electricity as a proportion of total consumption, diesel expenditure avoided and the payback period achieved at each installation. Those indicators connect engineering investment directly to financial performance and reveal whether the operating model is becoming more efficient over time.

The rollout should also be judged against the capital discipline that management has consistently emphasised.

Each installation should be funded from internally generated cash, and no project should proceed until it meets the defined return threshold. Every completed site must also deliver measurable operating savings that can fund the next phase of expansion. This sequencing protects the balance sheet while allowing efficiency gains to compound across the portfolio.

The programme ultimately carries significance beyond electricity generation.

For much of the past decade, hotel profitability depended heavily on growing occupancy, increasing room rates and controlling procurement costs. RTG is introducing another earnings lever by redesigning the cost structure itself. Electricity, once treated as an unavoidable operating expense, is becoming productive infrastructure capable of generating recurring financial returns.

Kadoma established the operating proof. Rainbow Towers will establish the commercial scale. The portfolio rollout will determine whether a 31% reduction in electricity costs can be reproduced across the estate as each property moves onto solar generation before the end of FY2027.

By then, RTG expects every operation to be supported by solar power sized to its own demand profile. The programme therefore extends beyond reducing electricity costs at individual hotels, and reshapes how the group produces, consumes and manages energy across its operating platform. If management executes the rollout on schedule while maintaining its discipline of funding projects from internally generated cash, solar will become one of the largest structural contributors to margin expansion over the remainder of the decade.

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