Tsogo Sun hit as virus leaves beds empty


Tsogo Sun hit as virus leaves beds empty

Published Date: 2020-06-01 | Source: Stephen Gunnion | Author: Stephen Gunnion

Tsogo Sun hit as virus leaves beds empty

The hotel operator has appealed for the government to continue opening the economy as quickly as possible.

Tsogo Sun Hotels says Covid-19 had a marked impact on trading in the fourth quarter of its financial year, with international demand for its hotel rooms pulling back as early as the last week of February. Demand deteriorated even further after President Cyril Ramaphosa imposed initial international travel restrictions in the middle of March and then banned inter-provincial travel a week later as part of the nationwide lockdown.

Releasing results for the year to end-March, the hotel operator said this resulted in a material reduction in revenue in March, which is normally a peak activity month for the group. Its entire portfolio in SA and the rest of Africa, including the Seychelles, was deactivated, with the exception of those hotels designated as quarantine facilities or as accommodation for essential service providers and people awaiting repatriation.

Tsogo Sun Hotels, which owns the Southern Sun and Garden Court brands, was unbundled from Tsogo Sun Gaming last year to give investors greater investment choice and the ability to better manage their exposure to gaming and hotels separately. Its results including pro forma comparisons from its pre-listing statement last May.

Total income for the year increased by 2.3% to R4.5 billion, as 2% growth in revenue from hotel rooms and a 7% rise in revenue from food and beverage sales offset a 7% reduction in property rental income and a similar decline in other income. Due to the shortfall in revenue as a result of the decline in demand, made worse by Covid-19, the group's earnings before interest, tax, deprecation, amortisation rent, long-term incentives and exceptional items (EBITDAR) fell 9% to R1.35 billion. It said it was cushioned by the successful conclusion of the fixed and variable leases of its three Sandton hotels last November. Otherwise, EBITDAR would have been 12% lower. It reported a R1.23 billion loss for the period, with earnings further impacted by exceptional losses of R1.7 billion - mostly relating to fair-value losses, restructuring costs and impairments. Adjusted headline earnings per share declined by 31% to 26.2c.

Tsogo Sun Hotels said it had been lobbying for the relaxation of travel restrictions and the resumption of inter-provincial travel to aid the hospitality industry.

The company's shares closed 3.5% higher at R1.50 on Friday.

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