Sun International to review Sun City

This after income from its flagship hotel in the North West fell by 6 percent in the six months to the end of June

GAMING and hospitality group Sun International plans to conduct a comprehensive review of its flagship Sun City Hotel in the North West after income from the hotel fell 6 percent in the six months to end June.

Group chief executive Antony Leeming said Sun International would commence with a comprehensive review of Sun City’s operations to achieve operational efficiency and to enhance the guest experience. “We are reviewing Sun City, because we are trying to improve the experiences of our guests to ensure that we meet their needs. The review is about getting our service right,” said Leeming.

Income from Sun City fell to R740 million from R784m in 2018,  while the hotel’s occupancy was at 61 percent, down 10 percent on the prior year, with the average room rate down 2 percent to R1 807.

The group said the hotel’s trading for the period was volatile, with a difficult start to the year following the December hail storm, while trading improved in May and June. It said the outlook remained uncertain.

Sun City’s gaming income dropped 3 percent to R241m. In the year ended December 2018, the group impaired R306m of the value of Sun City, partly as a result of the severe hailstorm in December last year, which resulted in the resort temporarily losing a number of rooms. However, income from Time Square rose 15 percent to R671m from R582m in 2018. Its casino market share was at 14.6 percent, up from 13.5 percent in 2018.

Income from the Sibaya Casino improved 6 percent to R667m from R632m last year.

In July the group said it would pay R540m to increase its stake in Sibaya by 22.4 percent to 87.2 percent. It also said it would increase its interest in Sun Slots by 30 percent, resulting in Sun Slots becoming a wholly-owned subsidiary.

“Both Sibaya and Sun Slots have been trading well, with the above transactions being concluded at attractive valuations and at levels where they will be earnings and cash flow enhancing,” Leeming said.

Sun International, which operates hotels in South Africa and Latin America, said its debt in South African was cut to R8.8 billion at December 31, 2018. “We have continued to cut debt by focusing on the basics, controlling costs and being better at what we do,” said Leeming.

He said the outlook remained constrained. 

“With the uncertain international environment and local economy under pressure, combined with weak local business confidence, we do not anticipate an improvement in trading conditions in the short term,” he said, adding that, management would continue to focus on its key strategic objectives and optimising the business.

“We will place emphasis on improving our operations and guest experience and will continue to take the necessary action on loss-making entities,” Leeming said.

The company said that despite the difficult political landscape and a challenging operating environment, its South African operations achieved 2 percent growth.

Sun International rose 10.93 percent on the JSE yesterday to close at R43.15.