Hotels offset flat income from Tsogo’s casinos

Tsogo Sun managed to offset flat income growth from its casinos with better performance from its hotels, the company said in its results statement on Wednesday morning.

The group’s overall income grew 8% to R13.2bn. Rooms revenue grew 11% to R3bn and food and beverages revenue 6% to R1.4bn.

"The hotel industry in South Africa continues to experience a recovery from the dual impact of depressed demand and oversupply. Overall industry occupancies have improved to 65.2% in 2017 from 63.8% in 2016," Tsogo said.

"Trading for the group’s South African hotels for the year recorded a system-wide revenue per available room growth of 6% on the prior year due mainly to an increase in average room rates by 5% to R1,067."

Gambling, which at R7.5bn contributed 57% of total income, grew 2% in the year to end-March from the previous year’s R7.4bn.

Montecasino contributed R2.7bn, or 20%, of the group’s income. Tsogo’s next biggest operation is Suncoast, which contributed R1.7bn, followed by Gold Reef City, which contributed R1.45bn.

The group has grown to 13 casino and hotel complexes following a string of deals during the reporting period.
It expanded in the Cape Town casino market via a R1.3bn deal with Sun International and Grand Parade whereby it bought 20% of SunWest and Worcester Casino.
"We continue to push for the opportunity to relocate one of the smaller Cape-based casinos into an untapped area in the metropole, despite significant delays by the province on this matter," the company said in its results statement.

Other deals included buying Liberty’s 40% share of Cullinan Hotels and 50.6% of JSE-listed Hospitality Property Fund by exchanging 10 hotels for shares.
Its parent, Hosken Consolidated Investment, is in the process of moving the gambling assets in Niveus to Tsogo in exchange for shares and cash.
Tsogo declared a final dividend of 70c, taking the total to R1.04, a 6% increase on the previous year’s 98c.