SA biggest hotel operator Tsogo Sun Hotels, recently renamed Southern Sun, narrowed its headline loss by more than four-fifths as more people travelled and the Covid-19 pandemic and restrictions eased.
But the group is grappling with higher costs as a result of the war in Ukraine, the flooding in KwaZulu-Natal and the fifth wave of the coronavirus.
Global food and fuel price hikes are hitting the pockets of the operator, the group said on Thursday in its results for its year to end-March, as possible guests cut back on luxuries such as travelling to save money amid higher inflation and interest rates.
“We do feel that we have passed the significant milestone of moving from a state of survival to a period of recovery,” the hotel operator said.
“Ultimately, the demand for travel should normalise and the resilience of local leisure and, to an extent, groups and conferencing business in recent quarters is encouraging,” it added.
Southern Sun, which runs more than 100 hotels in Africa and the Middle East, is the biggest player in SA’s leisure sector. Offerings range from hotels catering to lower-income clients to the upper end, including the Mount Grace Hotel & Spa in Magaliesberg and 54 on Bath in Rosebank, Johannesburg.
When Covid-19 hit, Tsogo closed many of its hotels — except those offering rooms for people in quarantine — operating a skeleton staff and deferring pay increases and bonuses, but it reported a full-year occupancy rate of 30.6%, more than double the previous year’s.
Its revenue has now more than doubled year on year to R2.7bn, most generated from room sales and more than a quarter from food and drinks.
The group saw its basic headline loss per share narrow 87.1% to 8.2c, but it is set for a boost in the new financial year.
It recently agreed to sell its 75.55% stake in the Southern Sun Ikoyi hotel in Lagos, Nigeria, to Kasada Albatross Holdings for $31m (R488.05m).
Tsogo Sun Gaming will pay Southern Sun Hotels R398.8m to take over the management and licensing agreements of 15 hotels. Southern Sun Hotels often manages the hotels Tsogo Sun Gaming premises on their behalf.
It also agreed with Tsogo Sun Gaming to buy the Southern Sun Emnotweni and StayEasy Emnotweni in Mbombela for R141.6m.
The company announced last week that shareholders would vote on changing the company name from Tsogo Sun Hotels Limited to Southern Sun Limited while retaining its share code on the JSE.
Tsogo Sun unbundled its hotel business in 2019, with Tsogo Sun Gaming and Tsogo Hotels being listed separately on the JSE, but said on Friday the gaming and hotel groups operate in different markets and that the “joint use of the Tsogo Sun brand is not optimal”.
This is a return to its roots after SA Breweries and hotel magnate Sol Kerzner created Southern Sun Hotels in 1969.
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