Hotels group Southern Sun has recorded its highest occupancy since the 2010 FIFA World Cup as the sector gears up for the peak summertimetrading season.
The performance sets the group up for a stronger second half to be boosted by busy calendar events such as the G20 summit and several other major happenings across the country.
In a statement on Wednesday, Southern Sun said its group-wide occupancy increased to 73.3% in October, boosting revenue by 18%.
Earnings before interest, taxes, depreciation, amortisation and rentals (Ebitdar) for the month jumped 27%, signalling a rebound from a muted first half of the financial year.
The October recovery comes after a more subdued six months to end-September where Southern Sun posted a 5% increase in income to R3.1bn driven almost entirely by the SA division, which grew income 8%.
This domestic strength helped offset a steep 29% drop in offshore revenue caused by the temporary closure of the Paradise Sun in the Seychelles for refurbishment and weaker trading in Maputo and Tanzania.
Basic headline earnings per share rose only 2% to 24.8c. Consistent with last year, no interim dividend was declared.
SA hotels recorded a 60.6% occupancy and a 6% rise in average room rates to R1,369. Rooms revenue climbed to R2bn as conferencing, events and group travel in Gauteng and the Western Cape drove demand. However, transient corporate and government travel remained softer due to delayed national budget approvals and the timing of Easter.
The group said it faced rising cost pressures across IT, utilities and distribution channels, which weighed on margins. Offshore trading losses of R9m further pulled down performance, leaving group ebitdar broadly unchanged at R818m and margins at 26%, down from 28% a year earlier.
Southern Sun used the period to refinance its debt into new two-year revolving credit facilities maturing in September 2027, with an option to extend to 2028. Net debt rose to R481m from R266m at year-end.
While the group expects a stronger second half, it has warned that high interest rates continue to dampen confidence. Even so, it believes medium-term occupancy recovery, easing inflation and SA’s removal from the FATF greylist should offer support.
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