Sun City gets its groove back
An investment of more than R2bn over the past 10 years is paying off for the reinvented resort
Sun City’s groove is back. The Sun International-owned leisure property, the brainchild of hotel magnate Sol Kerzner in the late 1970s, has spent the past few years reinventing itself as a sought-after family, entertainment and adventure resort after having lost some of its appeal as a niche casino and entertainment destination.
Returns wavered at the flagship resort over a number of years, but more than R2bn has been invested in Sun City over the past 10 years. It’s finally paying off. The resort near the North West platinum belt
delivered record earnings to Sun International for the year to December.
Sun International CEO Anthony Leeming says though Sun City did have years when things were OK, “it never shot the lights out”. Some years it made a little positive cash flow, other years not. The resort was effectively cash negative between 2012 and 2022 and there were times shareholders were itching to sell, reconstitute or possibly even mothball it.
Pop superstar Michael Jackson was interested in buying part of the property. In 1999 there was a flutter of media reports that Jackson was expected to pay about R400m for a 27% stake in Sun City. But this did not materialise.
The resort had its heyday during the 1980s and 1990s when it was associated with gambling, leisure and bold, even risqué, entertainment for the era. It played its part in sanction-busting at a time when South Africa was cut off from the rest of the world. The resort was primarily about the casino but celebrities, sports stars and high-profile figures also helped put it on the map.
It was the vision of Kerzner, who brought colour and innovation to the South African hospitality sector and business landscape as well as fodder for tabloids around the world. He broke the UN-imposed cultural boycott of apartheid South Africa by attracting some of the world’s best performers to come to Sun City including Frank Sinatra, Elton John, Queen and Rod Stewart.
Built in 1979 around its casino offering at a time when no gambling was allowed in South Africa, Sun City did phenomenally well and captured the attention of local and overseas visitors. But in post-apartheid South Africa, legal casinos chipped away at its gaming destination status. With cultural boycotts coming to an end and international artists performing at other, more central venues around South Africa, Sun City had to reinvent itself.
Sun International owns a sprawling portfolio of cash-spinning urban casinos, including Time Square in Pretoria, GrandWest in Cape Town, Sibaya in Durban and Carnival City in Brakpan. The group is also in the process of acquiring Peermont Group, which owns Emperors Palace in Gauteng.
Despite its strong presence in the urban casino market, Sun International committed R1bn to reinvestment in Sun City in 2016. Over the next few years the conference centre was redone and the entertainment as well as the main hotel area upgraded. The cabanas were improved, as was The Reserve at the Sun Vacation Club. The Palace was also refurbished. Most recently the group spent R300m on expanding Lefika Villas.
Leeming notes: “The property is in better shape than ever, but there’s still work we need to do.”
In 2023, costs were R2m lower a year than they were in 2017, and the business has been restructured.
So how did Sun City get its groove back? “We got the right people at head office,” says Leeming. “It’s about people, it’s about a place. It’s not an easy place to live and work.”
He says the big turnaround at Sun City from 2019 had been cost-driven. “For the first time in a long time we are confident that the future of Sun City is sustainable.” Cost efficiencies have come through outsourcing, getting repairs and maintenance right, and more streamlined focus. “There was hardly a stone unturned” and where, for instance, security guards on motorbikes used to secure the premises, drones are now being used. “We’ve used technology where we can, and simplified the admin process. Since Covid, operationally it’s better, and cost-wise it’s way better.”
Leeming says the group is now looking forward to significant upside. “Shareholders at some stage wished we had mothballed or changed it.” But he says Sun City is an important strategic asset for the country, and people depend on the resort for jobs. “But we can’t do it at all costs.”
Sun City contributed adjusted earnings before interest, tax, depreciation and amortisation before management fees of R455m for the year. Sun International plans to invest a further R530m in the resort, including a R350m refurbishment of the Sun City Hotel which will start towards the end of this year and be completed in the 2026 calendar year.
There are long-term plans for further expansion possibly another hotel at some point down the line but nothing has been decided yet.
The complex now comprises the resort, casino and conference and leisure facilities. Sun City does attract foreign tourists, but visitors are mostly local (about 80%) and the casino side is almost entirely local, according to Leeming.