Publications
Partners
- For more financial news, go to the News24 Business front page.
Hotel operator Southern Sun has reported a double-digit increase in group occupancies, saying it has seen particular improvement in the Western Cape, which has enjoyed several events such as the recent Netball World Cup.
Group occupancies for the five months to end-August rose about 11 percentage points to just over 55%, the group said in an update to accompany its AGM, while it is also saying revenue for its half year could improve by over a third, and its operating profits almost by three quarters.
Valued at about R7.1 billion on the JSE, the group operates a number of brands and hotels, including 54 on Bath, the Sandton Convention Centre, Sandton Towers and Beverly Hills Hotel.
Trading volumes in South Africa have continued to improve, having been hit in the prior year by Covid-19 restrictions, with the group saying it has seen more normalised demand from local and international travellers and strong demand for international conferencing and events.
Group occupancies are now only about 2 percentage points below pre-Covid-19 levels, it said while the average room rate - a measure of average charges - is up by 26% when compared to pre-Covid-19 levels.
The improvement over the pre Covid-19 period is achieved through a combination of higher achieved yielding and a change in the mix of hotels with the consolidation of a number of previously third-party leased properties.
Improved trading has been particularly prevalent in the Western Cape, which has enjoyed several large events hosted at the Cape Town International Convention Centre such as the recent Netball World Cup, it said.
In Gauteng, the group hosted the 15th BRICS summit in August 2023 at the Sandton Convention Centre, which led to substantial demand for accommodation at the surrounding hotels.
"In addition, 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.
Southern Sun said headline earnings per share are expected to decrease in a range of 23% and 36% for its half-year.
At the end of September 2022, the company was also boosted by the R399 million received from Tsogo Sun Gaming on the implementation of its separation agreement, and which relates to its management of various hotels for Tsogo, as well as licensing.
"The group is encouraged by these results and indications are for a strong summer tourism season, but remains cautious as the challenges of load shedding, fiscal constraints on government and the overall poor state of the South African economy continue," it said on Wednesday, adding that traditionally, the majority of the profits are earned in the second half.
Southern Sun's shares were unchanged on Wednesday but are up more than a third on a one-year basis.
