Tsogo Sun, Sun International close hotels
CAPE TOWN - Listed hotel groups Tsogo Sun Hotels and Sun International started closing their hotels and casinos yesterday ahead of the lockdown.
Sun International yesterday said it would start closing its hotels and casinos at various times until the end of the lockdown period. It said a handful of essential personnel would remain on the premises to ensure general maintenance and security.
The group said it had consulted with unions, employees, suppliers, service providers and concessionaires, and action was being taken to reduce costs during the lockdown. “The full financial impact of the coronavirus on the company will only be able to be determined once the lockdown has been lifted and its ramifications properly assessed,” the group said in a statement.
Separately, a spokesperson for hospitality industry association Fedhasa said all hotels, barring those that might be used by the government as quarantine sites in future, would close during the lock-down. Tsogo Sun Gaming said its casinos and Galaxy Bingo sites would also be closed from today.
“Attention has shifted to eliminating variable operating costs, reducing fixed costs and postpone or cancel capital expenditure, to preserve cash,” the group said.
“We will work to ensure monthly costs are reduced to an absolute minimum in the coming months.”
It said reduced trading volumes since March 19, and the lockdown, would have a negative impact on results for the financial year to the end of March. “The group still expects to deliver a solid set of results regardless of this setback,” it said in an update to shareholders.
Before March 15, Tsogo Sun Gaming had been on course to deliver about 4 percent revenue and earnings before interest, income tax, depreciation, amortisation, long-term incentives and exceptional items growth, with the second-half performing more than the first.
However, after President Cyril Ramaphosa announced the country’s 21-days lockdown from tomorrow, the group said the negative impact of the Covid-19 virus became directly evident for the first time. From March 19 the position “deteriorated significantly”, with sites operating with limited capacity due to the regulatory restrictions.
“All divisions, being LPMs operated in bars and restaurants, bingo sites and casino entertainment complexes, have been impacted.”
“We are engaging with the group’s various lenders, who remain supportive and will request covenant extensions/waivers in advance in the event that they are required during the next measurement period,” Tsogo Sun Gaming directors said.
Tsogo Sun Hotels last week announced an orderly deactivation of a number of hotels to consolidate demand into the remaining operating hotels. The group had been approached by the public and private healthcare sectors to assist in providing quarantine facilities, through the use of hotels that would otherwise have been deactivated.
“Although near impossible to predict, the group is working on the assumption that hotels will begin to be reactivated by no later than July 2020, and that the corporate and government travel sectors will recover relatively quickly,” Tsogo Sun Hotels directors said at the time. Sun International shares closed unchanged at R16.50 on the JSE yesterday. Tsogo Sun Hotels shares closed 0.76 percent lower at R1.31, and Tsogo Sun Gaming shares were 4.96 percent down to close at R2.30.