Southern Sun on Wednesday reported a strong increase in occupancy in the first five months of its financial year with international events such as the Brics summit in Johannesburg and the Netball World Cup in Cape Town driving demand as the tourism industry continues to recover to pre-pandemic levels.
The company, valued at about R7.1bn on the JSE, said in a trading statement on Wednesday that the return of domestic and international travellers, along with the demand for conferences and events, boosted its occupancy rate by 11.1 percentage points year on year to 55.3% in the five months to end-August. The same period last year was still affected by the Omicron variant, which damped demand for travel.
The rate is 1.9 percentage points lower than the same period in 2019 before the outbreak of Covid-19, but Southern Sun is confident of a a strong summer tourism season. Historically, most of the group’s profits are earned in the second half.
Revenue for the six months to end-September is expected to jump 29%-39% to R2.7bn-R2.9bn, helped by the average room rate, which in the five months to end-August increased 13% year on year and 26% compared with the same period before the pandemic.
“Most regions have seen good transient demand, with a substantial portion of the group’s hotels trading above pre-Covid-19 levels. Certain hotels in the Sandton and Rosebank nodes and the group’s budget offering, Sun1, have not fully recovered but are showing improvement as the year progresses,” the company said.
“Results from the group’s associate companies in the UK have been encouraging, with trading and profitability being above pre-Covid levels. The group has continued to maintain good cost controls, with [a] specific focus on ensuring that the significant savings achieved through the restructuring during the Covid-19 period are not lost,” it added.
Still, Southern Sun remains cautious about the challenges of load-shedding and poor domestic economic growth and some of its other international divisions.
“Hotels in Maputo and Lusaka in the group’s offshore division have not traded in line with expectations and are impacted by developments or lack thereof, in the oil and gas sectors and other mining activities, while Paradise Sun in the Seychelles has performed in line with expectations in the five months,” it said.
The group said in interim profit, with earnings per share and headline earnings per share (HEPS), which excludes certain items, are expected to be down 23%-36% to 14.5c-17.4c, mainly as a result of a once-off payment of R399m (R313m after tax) from Tsogo Sun after being spun off from the group in September last year.
The company expects to release its interim results on November 21.
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