Tsogo Sun hails end to travel ban, but still not out of woods
DURBAN - TSOGO Sun Hotels said on Friday that it welcomed the lifting of the international travel ban as announced by President Cyril Ramaphosa last week after it suffered a loss for the six months to the end of September.
The group operates a portfolio of more than 100 hotels in South Africa, Africa, the Seychelles and the Middle East.
It said although the lifting of the international travel ban would provide relief to the tourism sector, it did not see an improvement in its operations in the short term, and it might be forced to cut jobs.
“The UIF temporary employer/employee relief scheme has been of great assistance in alleviating the cash flow burden on both the company and its employees, while hotels have been closed or operating at low occupancy levels. The group has processed R103 million in grants over the period.
“However, with this assistance coming to an end and with occupancy levels unlikely to improve in the short term, the group will have to consider further operational restructuring to align headcount with trading levels,” Tsogo Sun said.
Tsogo Sun felt the impact of Covid-19 and lockdown during the period in which it saw an 84 percent decline in total income to R335m, and a 91 percent decline in hotel room revenue and food and beverage revenue.
The group said the R110m reduction in property rental income to R27m reflected the impact of rental concessions granted by the Hospitality Property Fund to third-party tenants during April and May.
Tsogo Sun reported a first-half loss of R246m, compared with a profit of R124m a year earlier.
Its earnings before interest, tax, depreciation, amortisation and rentals fell into a loss of R206m compared with earnings of R559m last year.
It reported a basic and diluted loss a share of 16.2 cents a share, compared with earnings of 9.8c last year, while the basic and diluted headline loss amounted to 40.5c, compared with headline earnings of 10c last year.
The group did not declare an interim dividend.
“These interim results clearly reflect the devastating impact that Covid-19 and the accompanying lockdown regulations have had on the hospitality industry in general and our group in particular,” Tsogo Sun said.
It said although they were encouraged by the recent move to level 1 of the lockdown, and the group was now trading at 68 percent of the hotels in its portfolio, the recovery of the hospitality industry was expected to be slow due to the uncertainties around the health of travellers, and the negative economic impact on the government, corporates and individuals would lead to reduced spending on hotel accommodation and conferences.
Tsogo Sun Hotels’ shares slid 2.78 percent to close at R1.75 on the JSE on Friday.