JOHANNESBURG – Sun City has warned it might have to lay off workers at some of its business units that will not pick up demand due to some of the Covid-19 lockdown restrictions remaining in place.
This as Sun City’s parent company, Sun International, this week announced plans to restructure certain operations and parts of the business in response to the Covid-19 impact.
Sun City today started welcoming back visitors for the first time after almost 160 days since closing its doors at the start of the national lockdown in March.
Resort finance manager Ugen Govender said the continuous ban on international travel and limiting the number of people to 50 on gatherings would impact the resort’s revenue.
The tourist destination derives 30 percent of its rooms revenue from international tourists and a significant income from conferences.
Govender said Sun City would have to address its high cost base and overstaffing.
“We can’t afford to keep the whole of Sun City open knowing that the third of our rooms are not going to be booked. We will start slowly, and as we get more support then open up more hotels gradually as the demand picks up,” Govender said.
“There are still onerous regulations on conferencing, so we can’t have big conferences at this time. Until that is switched on again, the staff that are employed for that will face the possibility of being laid off until that business reignites.”
Govender said it had been “extremely difficult” to keep the resort running in the absence of any revenue as base utilities and routine maintenance still needed to be taken care of.
He said all staff members, including managers, had taken salary cuts during the lockdown and the resort had applied for UIF/TERS benefits on behalf of employees.
“On average we lost about R120 million a month of revenue for the five months we were closed. In terms of just taking care of staff and all the expenses, we needed an average of about R25 million a month to manage the costs we had during the lockdown,” he said.
“It all came at a cost. We had provided for it in terms of normal budgets but without having cash at hand to take care of it, we needed to go to bankers to secure some funding.”
Sun City has implemented serious safety protocols with pre-screening, temperature checks, sanitising stations, plexiglass partitions, food safety, and physical distancing protocols at every facility across the site.
General manager Brett Hoppe said the way for Sun City to remain viable was to have attractive value-add for its customers and also be agile in responding to challenges.
“I think the key into the new norm is going to be value-add. There’s a very kind of knife-edge situation because the domestic market is going to be intensely competitive. And so the immediate instinct there is to diminish the price point in a competitive market, and I think that is not the correct approach because it harms margins,” Hoppe said.
“I think the biggest challenge at the moment is that those businesses that are going to be successful are those businesses that have a huge amount of agility. You need to be able to react, whether you react to changes in your cost base. Those are the things that one needs to do in order to survive, and hopefully show some growth.”
BUSINESS REPORT