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By Sandile Mchunu 
9h ago
JOHANNESBURG – The hotel and leisure group Sun International announced yesterday the closure of its Naledi and Carousel hotels, claiming that the Covid-19 pandemic had forced it to review its operations to save costs.
The group said the closed closures imposed to contain the spread of the pandemic had cost it millions, leaving it with a glut of more than 2,200 employees at its operations at the iconic resorts of Sun City, Maslow Sandton, Boardwalk, The Table Bay and Wild Coast. .
CEO Anthony Leeming said the pandemic and associated shutdowns tested the group’s resilience to the limit.
“The Covid-19 pandemic required us to conduct a more in-depth review as we anticipate that our properties, particularly our hotels and resorts, will take some time to recover,” said Leeming.
The group said it planned to reduce its number of people by at least 2,300 after it was forced to stop operations for three months as a result of the Covid-19 outbreak. The group said the proposed reduction exercise has an estimated total employment cost of R280 million.
Leeming said the group had already enacted a downsizing process in Chile, with voluntary downsizing packages involving about 1,000 people.
He said 451 employees had accepted voluntary dismissal processes.
“The Covid-19 pandemic has hit the gaming and hospitality industry especially hard and forced us to make tough decisions to protect the business and limit the impact on employment as much as possible,” said Leeming .
The group said it was also in the process of closing the Naledi and Carousel casinos as part of its expedited disposal of nonessential assets.
Sun International announced the sale of its 65 percent stake in Sun Dreams for $ 160 million (R2.65 billion) about 10 days ago, and the proceeds will be used to settle the group’s debt in Chile and South Africa.
The group also completed a rights offering and raised 1.2 billion rand to help with liquidity during the pandemic and subsequent recovery.
The planned job cuts come after the group reported a 56 percent decline in consolidated revenue to R3.7 billion over the six months to the end of June and a 96 percent drop in earnings before interest, taxes, depreciation and amortization at R79m.
The group said its adjusted losses rose to R885m from a profit of R172m last year.
He said adjusted total losses came to 702 cents a share.
Leeming said the closing of the group’s operations during the shutdown provided an opportunity to conduct an in-depth review of processes, operating structures, systems, and the offering and guest experience.
“This review resulted in the identification of cost savings on outsourcing and service provider contracts, IT systems and other overhead costs of more than R250m,” said Leeming.
He said the recent announcement of the move to level 2 of the lockdown to allow interprovincial travel is a positive step, but that they will open Sun City in September.
“However, Table Bay and Maslow Sandton will remain closed until there is enough demand to justify reopening,” Leeming said.
Shares of Sun International were down 0.16 percent on the JSE yesterday to close at R12.48.
BUSINESS REPORT
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