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Hotel and casino operators close shop
Hotel and casino operators close shop
Published Date: 2020-03-25 | Source: Stephen Gunnion | Author: Stephen Gunnion
Operators in the hospitality sector are preparing to close almost all their operations for the duration of the countrywide lockdown.
Hotel and casino operators are preparing to scale back their operations as the country goes into lockdown to help reduce the spread of the Covid-19 pandemic. They're also keeping their bankers on standby in case of an extended period of reduced activity that impacts their liquidity.
Sun International, Tsogo Sun, Tsogo Sun Hotels and City Lodge are amongst those who have warned shareholders of the potential impact.
Sun Intentional said all its hotels and casinos would close almost immediately until the end of the lockdown period, with only a handful of key and essential staff remaining on the premises for general maintenance and security. It said it continued to engage with its various lenders to ensure that its credit facilities were maintained. The full financial impact would only be determined once the lockdown had been lifted, it said.
Last week, its Sun Dreams operation in Latin America closed all its casinos in Chile, as well as its hotels and food and beverage operations, until at least 29 March. The relevant authorities also closed its operations in Peru, Argentina, Colombia and Panama, with no certainty on when they would be allowed to reopen.
Tsogo Sun Gaming said all its casino and Galaxy Bingo sites would close by today but trading volumes had already been under pressure since last Thursday as the government started to place restrictions on alcohol sales. Until then, it said it had been making progress with its business improvement plans, including cost saving and operating efficiency initiatives. It said the reduced trading volumes since 19 March and the lockdown would have a negative impact on the results for the financial year to end-March, with the previously anticipated growth lost. However, it said it still expected to deliver a solid set of results regardless of the set back.
Although it expected debt covenants to be met at its next measurement date at the end of the month, Tsogo said debt remained high and reducing it would be a priority once trading resumed. It said its debt covenant status at the next measurement date at the end of September could only be assessed when there was more certainty on the environment it was operating in.
Meanwhile, Tsogo Sun Hotels, which was unbundled from Tsogo Sun last June, said it would only keep those hotels that met government's prescribed requirements of supporting essential or critical business continuing services open. It also called off an investor conference call due to the "extremely fluid" situation.
City Lodge said coupled with the imposition of the ban on international arrivals from most countries and restrictions on domestic travel on an already challenging operating environment, it was experiencing a significant downturn in occupancies. Prior to the announcement of the lockdown, it had planned for the temporary closure of 24 of its 62 hotels. The extent of further closures would be dictated by the degree to which it was called upon to provide support to government and essential and critical business continuity services. It said it was also ready to provide quarantine facilities or staff accommodation.
While City Lodge met its borrowing covenants at the end of December, it said it remained in close contact with its funders and was engaging on all options available to ensure it emerged from the period of uncertainty in a position of strength.
Sun International closed unchanged at R16.50 yesterday while Tsogo Sun Gaming fell 5% to R2.30 and Tsogo Sun Hotels declined 0.8% to R1.31. City Lodge closed 7.1% higher at R17.98. Its announcement was made after the close of trade.