Staying afloat in the struggling hospitality industry – Sun International CEO

Staying afloat in the struggling hospitality industry – Sun International CEO

Iconic South African gaming and hospitality group Sun International has been smacked hard by Covid-19 containment measures. This week, it reported a loss of more than R1 billion for 2020. Like other companies in the hospitality sector, they were forced to shut operations for more than three months last year. The group was also hit by ongoing restrictions – like bans on travel, alcohol and limits on the number of people allowed to gather in one place. In a report on its results last week, Sun International set out some of the measures it took to respond to the pandemic, including a 60% reduction in payroll costs, accelerating the disposal of non-core assets and the successful conclusion of a R1,2 billion rights offer. BizNews spoke to CEO Anthony Leeming. – Jackie Cameron

Anthony Leeming on Sun International:

We are quite lucky in a sense. We’ve got quite a big casino component and gaming. It’s still the largest part of our business. We have a fairly big hotel business, but the main [component] is gaming. The gaming side has actually recovered not too badly and proved quite resilient – particularly on the LPM side. The casinos are getting up to 75% – 80% of prior years. On that and with cost savings, we’re making pretty good cash flow.

On the hotel side, a place like Sun City is very dependent at the moment on local leisure because the other segments of its business are also not existent. We really are dependent on leisure travel, using our gaming leisure as well. We have a lot of gaming clients going to our properties at the moment. International business is just absolutely non-existent.

On the next 12-18 months:

It’s going to be a time of treading water. Right now, we don’t see a lot of demand. Obviously, international [demand] going to be very low. Business travel is going to be down, [as] businesses are still not in the office. Meetings are going to be reserved for very small meetings. The focus is very much on local leisure, reducing costs and trying to stimulate some mid-week leisure demand – particularly at places like Sun City. Pricing for consumers is going to be great and we’re going to just have to sweat it out.

On job losses within the company:

About 2,300 [jobs have been lost over the past year]. At the moment, [we employ] about 7000. We’ve got reduced hours at the moment in place, certain people are working reduced hours. We’re guaranteeing them a certain number of hours, but not full-time. At our bigger properties with the retreat structure and with natural attrition, at the casino [and] gaming side, most people are pretty much active. Not quite at full capacity, but working a reasonable number of hours.

On the resort side – especially the meetings and conference people – we’ve created a new pool out of the retrenched. We kept 300 on an ‘as need’ basis. They don’t have any guaranteed hours. At the moment, we’re not really using anyone. Where we do have vacancies, we use those people first. It really is about carefully managing your staff [and] keeping hours down. For example, at Sun City, we closed The Cascades during the midweek and opened up on the weekend, when there is a lot of demand.

On changes within the business:

I think the biggest thing we’ve changed is [that we are] busy starting the implementation of a new casino management system. We’ve partnered with GHA – which is Global Hotel Alliance. We’re looking at a new booking engine, which we’ve actually selected and we’re busy on implementation side. We believe that’s going to enhance the guest booking experience.

We looked very hard at our marketing and communication and found where we were wasting effort. We improved a lot of that and spent a lot of time with our marketing and creative teams to get alignment and drive that forward. We aligned all the PR around the group, with one company. I think it’s making a big difference at the moment. So PR [and] marketing, the whole effort has been reviewed and realigned.

On the international operations:

We’re primarily focused on South Africa at the moment. We need to start importing more revenue into South Africa. We have the products – both on the hotel, leisure and the gaming side. A big focus for us, is rather going to be using our products and leveraging them up by bringing more income in, as opposed to going outside. The casino space is moving. We have very good assets, but there’s a lot of movement on the online space – where we need to be more active. We have a good online business at the moment.

We’re going to push more into that direction, [rather than] trying to have a land grab and bigger casinos – which I think worldwide we’re not big enough for. But on the online space, it’s a little bit easier. We have quite a good brand and good business at the moment in that space. We need to leverage that more. We’re comfortable that we’re primarily South African based, but I do think we can bring international business into the country with the products we do have.

Read more:

  • Faster vaccine deployment needed to save SA tourism
  • Sun International loss reveals scale of Covid-19 hit; says it will recover
  • Curious case of SA’s Covid-19 decline – With insights from The Wall Street Journal

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