Matebello Motloung

This follows the group’s disappointing performance in the six months to December 2009, during which overall revenue grew by only 2% to R4,1bn.

The company owns entertainment facilities such as the GrandWest, Sun City and the West Coast Sun.

Sun International CEO David Coutts Trotter says the combination of declining tourism and lowered consumer spending levels has knocked the business.

Worst hit have been the hotels and resorts, which depend on tourism and the hosting of conventions. Revenue from this segment was down 14% to R409m.

Despite a 9% decrease in the average room rate to R824, overall room occupancy dropped from 77% to 70%. Sun City, one of Sun International’s hardest hit resorts, reported an occupancy decline of 10 percentage points to 71%.

Revenue at GrandWest, the largest property, fell from R841m to R787m.

The group’s assets in Lesotho, Botswana, Zambia and Swaziland were not spared either.

Lesotho’s contribution to revenue fell from R50m to R44m. Sun International recently spent R140m to refurbish the Lesotho Sun, which has hotel, casino and conference facilities.

Revenue from Botswana declined by 15% to R81m and earnings before interest, taxes, depreciation and amortisation dropped by 26% to R25m. This, the group says, is due to economic conditions in that country, which have led to a decline in disposable income, and “the 10% strengthening in the value of the rand against the Botswana pula”.

The gaming business has done better, up 5% to R3,2bn. But this is a shadow of the previous years’ performances.

“Gaming and casino have been hard hit for the past two years. The sector has been stagnant, particularly in Cape Town and Port Elizabeth,” says Coutts-Trotter.

The Western Cape has been affected by declining tourism numbers and the Eastern Cape is suffering because of the motoring sector’s difficulties.

Sun International intends to finalise its plans to increase its shareholding soon in the Federal Palace Hotel in Lagos, Nigeria from 29% to 49%. Coutts-Trotter says the delay is not caused by anything alarming. “We’re just going through the processes required by securities exchange [authorities] in Nigeria.”

The group hopes the 2010 World Cup, which will bring a five-week windfall, will boost future tourism numbers. Like its counterparts, it has contracted 80% of its rooms to Match, Fifa’s accommodation partner.

Sun International said on Monday that its Monticello casino and gaming complex in Chile was damaged and shut after the earthquake that rocked the country.

Source: Financial Mail