Sun International’s SunBet shoots the lights out

JSE-listed hotel and resort groups Sun International and City Lodge Hotels have both reported greater demand for rooms at their hotels, resulting in higher room rates and occupancies. Sun International released its latest interim results and City Lodge its full-year results to investors on Monday.

City Lodge Hotels saw an 18-percentage point rise in occupancies to 56% for the year ended June 2023, compared to an occupancy level of 38% in 2022. This year’s group occupancies are also slightly higher than 2019, which saw occupancies at 55%.

City Lodge said that greater demand for hotel space has further boosted average room rates by 12% this period, marking a recovery on pre-Covid levels.

“City Lodge Hotels has enjoyed an impressive recovery in occupancies and average room rates post the Covid-19 pandemic and the severe effects of the lockdown on the hospitality and tourism industries.”

For Sun International, the resorts and hotels division reported an average occupancy rate for accommodation of 66.8%, compared to 57% reported in the previous comparable period. Higher occupancies have contributed to the division’s 26.9% growth in income to R1.4 billion.

“We continue to experience a strong recovery in both international and local business in the resorts and hotels segment of the group. Domestic leisure, conferencing and sports and events revenues continue to grow while international leisure business recovered strongly in the review period,” – Sun International said.

“Sun City continues to achieve exceptional performance following the restructure and streamlining of its operations, along with the resort’s strong appeal to the South African market. Additionally, the Table Bay Hotel experienced a significant surge in demand from international markets, leading to robust growth in occupancies and room rates,” – the group added.

Betting highs

Gaming, which forms a significant part of Sun International’s operations, accounting for 78% of group income, reported an income growth of 6.6% for the six months ended June 2023.

Online betting platform SunBet came in as the star performer for the division this period, generating a record income of R90 million, up 138.4%. Sun International added that SunBet has recorded a mega increase in unique active players, first-time depositors and deposits on its platforms during the period under review.

“SunBet offers the group significant and exciting growth potential, with the added advantage of the business model being self-funding and capex light. With this in mind, we continue investing in people and marketing to significantly increase our share of the fast-growing online gaming market.”

The hotel group said it plans to capitalise on SunBet’s growth and launch the platform into other markets, including Ghana, Zambia and Kenya, by the first half of 2024.

Dividend

Both City Lodge Hotels and Sun International declared dividends for their respective financial periods. City Lodge moved to resume its final dividend at 8 cents per share after having withheld dividends in the previous comparable period. Sun International posted an interim dividend of 148 cents, 68.2% higher than the last period. Both groups forecasted positive expectations for growth in the coming periods despite the economic challenges that disrupt business operations.

“The board remains cautious about the economic challenges, particularly in South Africa, with the ongoing electricity and water supply constraints and the high inflation and interest rates over the last 12 months. However, the group also recognises the much-improved liquidity position and the promising outlook and is confident that it can withstand these headwinds,” – City Lodge said.

“Our balance sheet remains strong, and we are focused on efficiencies as we look to protect and grow our income and margins. SunBet is achieving record numbers in terms of income and all key indicators and will deliver another step change this year as this business continues to scale at a rapid pace. Our resort and hotel properties have continued to perform exceptionally well, and we anticipate another good year from them in 2023. Urban casinos and LPM operations are demonstrating continued resilience despite the tough operating environment,” – Sun International said.

Source: moneyweb.co.za

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