Revenue 10% hotter as Sun International opens rooms

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Sun International Hotel.photo supplied 213

Audrey D’Angelo

A recovery in hotel bookings combined with the opening of new facilities showed in a 10 percent rise in revenue to R5.2 billion achieved by Sun International in the six months to December last year. The shares leapt on the news yesterday and the interim dividend was raised to R1.10 a share from 90c a year earlier.

Newly appointed chief executive Graeme Stephens said further gradual improvement in the trading environment was expected in the second half of the year.

Income from gaming improved by 11 percent to R3.9bn. Stephens said a large proportion of the gains came from the group’s Chilean operation at Monticello near Santiago, although income from local casinos rose by 7 percent and from those in other parts of Africa by 8 percent to R169 million.

Sun International is now focusing on Latin America as a growth area and is in the process of acquiring a freehold interest in some sections of the Trump Ocean Club international hotel and tower in Panama City.

Earnings before interest, tax, depreciation and amortisation for the six months rose to R1.6bn. But despite the present weakness of the rand, foreign exchange gains for the final six months of last year, when it depreciated by 2 percent against the dollar, were only R10m compared with the R69m in the last half of 2011, when it depreciated by 21 percent.

Adjusted headline earnings climbed 48 percent to R423m and diluted headline earnings a share gained 39 percent to R4.08 from the previous year.

The hotels and resorts division lifted revenue by 6 percent to R1.3bn, helped by the R1 billion expansion at the Boardwalk in Port Elizabeth. The occupancy rate dropped 2 percentage points to 61.3 percent but this was due mainly to an additional 150 rooms now available to the Wild Coast Sun. The average daily rate rose by 6 percent to R1 256.

Sun City lifted revenue 3 percent to R653m, helped by a rise in foreign visitors, although the local conference and meetings business declined by 27 percent in room nights sold. But higher room rates lifted the average daily rate by 6 percent to R1 582.

Properties in Swaziland, Zambia, Nigeria, Botswana and Namibia grew revenue by 6 percent compared with the previous year, to R416m, although a new requirement for visitors to Zambia to have a yellow fever vaccination certificate to re-enter South Africa discouraged some travel to the country.

Looking ahead, Stephens cautioned that despite the expected improvement in demand in the coming six months, the higher capital charges and rentals for the Boardwalk project and the opening of the new Maslow business hotel in Sandton was likely to result in lower growth in adjusted headline earnings a share.

The shares leapt 7.2 percent to close trade at R102.90 on the JSE.