Tsogo Sun Hotels sees core profit hit from travel restrictions
JOHANNESBURG - South Africa’s Tsogo Sun Hotels, one of many tourism companies to be hit hard by the impact of the coronavirus, said on Thursday it could face a fall of up to 10 percent in full-year core earnings due to the drop in local and international travel.
Tsogo Sun said earnings before interest, income tax, depreciation, amortisation, rent, long term incentives and exceptional items for the year ended March 31 was expected to be 8 percent - 10 percent lower than the R1.4 billion a year earlier.
One of South Africa’s biggest hotel groups, with brands such as Southern Sun and Garden Court, said the first nine months of trading saw demand by corporate and leisure groups as well as the transient traveller showing little signs of recovery as consumers and firms rein in spending in a struggling economy.
Subsequent international travel restrictions and a total ban on inter-regional travel to curb the spread of the coronavirus had an impact on the group’s fourth-quarter trading, with international demand shrinking as early as February.
All Tsogo Sun hotels in South Africa, the rest of Africa and the Seychelles have been closed, with the exception of those designated as quarantine facilities or as accommodation for essential service workers and persons awaiting repatriation.
The company, which also operates casinos, said lenders to Tsogo Sun Hotels and its subsidiary Hospitality Property Fund have approved the waiver of September covenants.
It said it has temporarily laid off employees and has had to reduce pay for all levels including executive management and board members.
The group is also seeking rent relief from landlords during the lockdown and for subsequent low demand periods, and has negotiated reduced or extended payment terms with major suppliers.
Tsogo Sun shares, which are 65 percent lower year to date, were 2.2 percent down at 0927 GMT.Reuters