By Gareth Vorster

Hotel and gaming group Sun International says that demand for hotel accommodation remains weak globally and this includes in SA, particularly in the luxury end of the market where the group is predominantly positioned.

Sun International on Monday announced diluted headline earnings per share of 456 cents, for the year ended June, from 555 cents previously

It noted diluted earnings per share of 456 cents, from 539 cents in 2010.

Revenue for the year increased by 12% to 8.9 billion rand, while operating profit declined a tad to 1.61 billion rand, from 1.63 billion rand.

The board declared a final dividend of 120 cents per share.

The group said that in the light of a weak demand in accommodation, its performance was reasonable, with rooms revenue of 904 million rand, up 5% from last year in part due to the full tear trading of the Federal Palace (Nigeria). Overall group occupancy was down 1% at 66% and the average room rate of 912 rand was 2% ahead of last year, it said

Chief executive David Coutts-Trotter said that South African customers continued to feel economic pressure.

"Demand for hotel accommodation remained weak globally as well as in SA particularly in the luxury end of the market where the group is predominantly positioned," he said.

"We are continuing to invest in the expansion of the business as evidenced by the developments at the Wild Coast and Boardwalk. Capital expenditure was 924 million rand in the year under review and included a new Salon Prive at Windmill, commencement of the Boardwalk expansion, refurbishments at Wild Coast Sun and Kalahari Sands and other ongoing asset replacement," Coutts-Trotter said.

The chief executive said that its Monticello business, located approximately 60 kilometres south of Santiago in Chile, had performed very well.

Despite increased competition from its competitor in Rinconada, the group managed to grow the business and "achieved pleasing results", benefiting from a relatively strong Chilean economy and further growth in the propensity to gamble within the region.

Sun City's room occupancy was 3% lower at 66% while the average room rate was in line with last year at 1,322 rand.

The Table Bay achieved occupancy of 48% from 53% and the average room rate increased marginally in the current year to 2,060 rand.

The Royal Livingstone and Zambezi Sun achieved an aggregate occupancy of 45% (49%) at an average room rate of US$198, a 5% increase compared to last year.

The Federal Palace generated occupancies of 63% at an average room rate of $256.

Looking ahead, Coutts-Trotter said the economic environment impacting the group remains generally negative globally and in SA, hence hospitality and gaming revenues are only expected to improve marginally in the year ahead.

Margins were likely to stabilise and growth in adjusted headline earnings per share was consequently anticipated for the year ahead.

"We continue to make significant investments in human capital development initiatives, our systems and the refurbishment of our properties. The group has a passionate and motivated team to take us forward into the new year."

"We are actively pursuing further growth opportunities in our current markets and other emerging markets," he said.

By midmorning, shares in Sun International declined 80 cents to R86.02 on the JSE, having reached a year high of R110.63 in November 2010, and a year low of R83.49 in March.

Source: I-Net Bridge