Sun International closes two SA hotels

Hotels and leisure group Sun International on Monday announced the closure of its Naledi and Carousel hotels, charging that the Covid-19 pandemic had forced it to review its operations to save costs.

The group said lockdowns imposed to contain the spread of the pandemic had cost it millions, leaving it with an excess of more than 2200 employees across its operations in the iconic holiday resorts of Sun City, Maslow Sandton, Boardwalk, The Table Bay and Wild Coast.

Chief executive Anthony Leeming said the pandemic and the associated lockdowns tested the group’s resilience to the limit.

“The Covid-19 pandemic required us to undertake a deeper review, as we anticipate that it will take some time for our properties, in particular our hotels and resorts, to recover,” Leeming said.

The group indicated it planned to cut its head count by at least 2300 after it was forced to halt its operations for three months as a result of the Covid-19 outbreak. The proposed retrenchment exercise has an estimated total cost of employment of R280million.

Leeming said the group had already enacted a retrenchment process in Chile, with voluntary retrenchment packages involving about 1000 people.

He noted 451 employees had accepted voluntary retrenchment processes.

“The Covid-19 pandemic has hit the gaming and hospitality sector particularly hard and forced us to make some tough choices to protect the business and to as far as possible limit the impact on employment.”

The group was also in the process of closing the Naledi and Carousel Casinos as part of its accelerated the disposal of non-core assets.

Sun International announced the disposal of its 65percent interest in Sun Dreams for $160m (R2.65billion) about 10 days ago, with the proceeds to be used to settle the group’s debt in Chile and South Africa.

The group also completed a rights offer and raised R1.2bn to assist with liquidity during the pandemic and subsequent recovery.

The planned job cuts come after the group reported a 56percent decline in consolidated income to R3.7bn for the six months to the end of June and a 96percent fall in earnings before interest, tax, depreciation and amortisation to R79m.

The group said its adjusted losses swung to R885m from a R172m profit last year.

The adjusted headline losses came to 702cents a share.

Leeming said the closure of the group’s operations during lockdown provided an opportunity to undertake an in-depth review of processes, operating structures, systems and guest offering and experience.

“This review resulted in the identification of costs savings in outsource and service provider contracts, IT systems and other general costs of more than R250m,” he noted.

He said the recent announcement of the move to level 2 of the lockdown to allow inter-provincial travel is a positive step, but they will be opening Sun City in September.

“The Table Bay and The Maslow Sandton will, however, remain closed until there is sufficient demand to justify their reopening,” added Leeming.

Sun International shares declined 0.16percent on the JSE yesterday to close at R12.48. -BusinessReport