Pool area at the Southern Sun Maputo.Photo Supplied Pool area at the Southern Sun Maputo.Photo Supplied
Johannesburg - A continued recovery in the hospitality industry helped listed hotel and gaming group Tsogo Sun to deliver firmer results for the six months to September, although volatility in monthly results create a degree of uncertainty around the sustainability of the growth, chief executive Marcel von Aulock said yesterday.
In interim results released yesterday the group reported a 20 percent rise in adjusted headline earnings a share to 81.3c. Total income rose by 9 percent to R5.2 billion with a 6 percent growth in gaming win assisted by 17 percent growth in hotel rooms revenue and a 21 percent growth in food and beverage revenue. Earnings before interest, tax, depreciation, amortisation and property rentals rose 9 percent to R2bn. The interim dividend was up by 21 percent to 29c a share.
Tsogo Sun put aside R1.3bn towards development, acquisition and expansion projects and R400 million towards maintenance of its existing properties.
Von Aulock said the hotel industry continued to recover from a period of depressed demand for accommodation combined with an oversupply of rooms. The recovery had made it possible to increase revenue from rooms by 10 percent.
“These results reflect the growth potential of the group should the consumer and corporate sectors of the local economy continue to improve. There is volatility in the monthly results, which creates a degree of uncertainty around the sustainability of the growth, but we continue to pursue opportunities to expand our business.”
He said the group had delivered a solid performance although the pace of growth had slowed in its second quarter.
Tsogo Sun was “highly cash generative and excellent progress was made on our growth strategy with R1.3bn invested into expanding and upgrading existing assets and acquiring other strategic interests during the period“.
Von Aulock said the group would continue to expand in this country as well as in Nigeria and Mozambique. It would bid for the licence for a second casino in Cape Town, to compete with Sun International’s GrandWest casino.
The group was doubling the size of its Southern Sun hotel in Maputo and would concentrate on hotel business rather than gaming in Africa. Although Maputo was attracting tourists, most of the hotel guests there and in other parts of Africa were on business and many were South African.
The group was also entering a management contract for a hotel in Abu Dhabi “although we prefer to own our hotels”.
Recent investments included acquiring the remaining 10 percent interest in Tsogo Sun KwaZulu-Natal to take full ownership of Suncoast Casino and Entertainment World. It has completed the redevelopment of Hemingways casino in East London while work on expanding and substantially redeveloping the Emnotweni casino is expected to be completed by the end of this month.
It has started the $30m (R300m) expansion of Southern Sun Maputo, which involves the addition of 110 rooms and conference facilities, refurbishing the existing 158 rooms, and expanding the restaurant, lobby and back-of-house facilities. It has also acquired a 75.5 percent stake in Ikoyi Hotels in Lagos, which was previously managed by the group on behalf of third-party owners, for a total investment of $70m.
In addition to this it acquired shares in various properties over the period for R61m; acquired additional effective interests from minorities and associates in various cinemas and hotels during the period for R40m; and carried out maintenance across the group.
Yesterday Tsogo Sun shares dropped 0.11 percent to R27.22. - Business Report