The company which owns the most luxurious hotel in Harare, Zimbabwe has reported a massive rise in its profits.

But the figure reflects the rampant inflation in the troubled nation, rather than an increase in business.

The group reported an operating profit of 2.3bn Zimbabwe dollars (�28.1m; $41.1m) for the financial year that ended in March, more than double the sum recorded for the previous 12 months.

The Meikles Africa Group owns the flagship Victoria Falls and Meikles hotels in Zimbabwe, and the Cape Grace hotel in South Africa.

But the adverse political situation meant that both Meikles and Victoria Falls operations only managed to fill a third of room vacancies.

And inflation-adjusted figures revealed an operating loss of 267m Zimbabwe dollars (Zim$) for the year compared with profits of Zim$475m the previous 12 months.

Black market

Official inflation for the year was 91.6%, although the real figure was likely to have been considerably higher.

Analysts believe that, because of government price controls and the effects of a booming black market, official data does not accurately reflect Zimbabwe's true economic situation.

The government re-introduced price controls on basic consumer items last October to rein-in soaring inflation.

The controls created artificial shortages of commodities, about 80% of which are now estimated to be sold on the black market at exorbitant prices.

Retail ambitions

Meikles, which is listed in Johannesburg and London, also owns a number of supermarkets in Zimbabwe.

The group said it managed to ensure the consistent availability of a range of products through imported items, and managed to increase operating profits by 33% before taking inflation into account.

In May, it plans to open a new supermarket in Chadcombe - a district of Harare, and is aiming to become the major supermarket and retail business in Zimbabwe.

The board has declared a final dividend of Zim$4.4 for the year, an increase of 100% over the previous year.