Hotel group Southern Sun says strong growth in its SA operations has been offset by offshore weakness, cost pressures, and the temporary closure of its Paradise Sun resort in Seychelles.
In remarks to be delivered at the AGM, the group said for the five months to end-August, SA hotels achieved an occupancy rate of 59.2%, up from 57.6% a year earlier, while average room rates rose 6.7%, driving room revenue growth of 9.7%. Demand was boosted by conferencing and event business in Gauteng and the Western Cape, though government and corporate travel remained muted.
Offshore performance, however, lagged, with average occupancy falling to 33.4% from 46.5%. Paradise Sun was closed from April for a major refurbishment, costing the group about R30m after tax, while trading in Mozambique and Tanzania remained subdued, it said.
The hotel has now reopened and trading over the remainder of the year expected to recover strongly.
The group’s overall total occupancy edged up to 57.8%, with room revenue rising 6.4%. Higher IT and utility costs, alongside a R14m accounting adjustment linked to leases, will also weigh on earnings for the half-year.
Southern Sun said is investing heavily in refurbishments and expansion, including upgrades at Southern Sun Newlands, Rosebank, Mbombela, Mount Grace in Magaliesburg, and Birchwood Hotel near OR Tambo. Expansion plans are also progressing in Cape Town’s Foreshore and at the Oceans uMhlanga development in KwaZulu-Natal.
These projects, the group said, would be funded from existing facilities and operational cash flows, while still enabling shareholder returns.
Earnings for the first half of the year will be impacted by R30m after tax due to the closure of Paradise Sun. A change to the IFRS16 accounting policy (leases) in the prior year is expected to have a R14m after tax impact for the half year results and no impact on the full-year results, it said.
Since April, Southern Sun has repurchased R79m in shares at an average price of R8.83 and paid a final dividend of R335m for the 2025 financial year.
Financial results for the six months to end-September will be released on or about November 19.
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