Southern Sun half-year revenue jumps 34%

Southern Sun, a prominent hotel group, has reported a significant 34 per cent increase in first-half revenue, reaching R2.8 billion. This growth has been attributed to improved trading in the Western Cape region of South Africa and the successful hosting of various large-scale events such as the Netball World Cup and the BRICS summit. Despite the surge in revenue, the group's profit for the year experienced a 22 per cent decline, amounting to R254 million. Marcel von Aulock, the CEO of Southern Sun, joined CNBC Africa for an in-depth discussion regarding the company's financial performance, the key factors affecting profitability, as well as future outlook and strategic plans. Von Aulock highlighted the impact of events and conferences on the company's income, noting that while they provided a boost, they were not sufficient to significantly improve the bottom line. He emphasized that the reporting period marked a substantial improvement in core trading profits, with EBITDA up by 67 per cent and the bottom line soaring by a remarkable 1,400 per cent. The CEO attributed the surge in profits to a return to normal trading conditions, with higher occupancies and rate growth compared to the previous year which was still affected by the Omicron variant. Von Aulock acknowledged that while the separation payment from the company's sister company, Gaming, significantly contributed to the improved financial performance, the core trading profits also recorded a substantial increase. The geographic breakdown of the company's operations revealed that Cape Town emerged as the strongest performing region, experiencing robust growth driven by various events in the Cape Town International Convention Centre (CTICC) and other factors stimulating activity in the Western Cape. von Aulock expressed optimism about the strong performance in the Western Cape, citing positive trends in Cape Town, Kaucheng, and other outlying areas, including Durban. Moreover, the CEO discussed the company's operations outside of South Africa, highlighting the performance of establishments in Mozambique, the Seychelles, and the UAE. While Mozambique's potential hinged on the activation of the oil and gas industry, delays in the process impacted the region's performance. In contrast, the Seychelles witnessed strong international tourism, contributing significantly to the company's profitability. Von Aulock also mentioned the sale of the company's Nigerian operation, which had a transformative effect on the balance sheet, reducing debt and enabling strategic investments. With regards to occupancy targets, von Aulock emphasized the seasonal nature of the business, pointing out that the company's key months for profitability were October, November, February, and March. He anticipated higher occupancy rates in the second half of the year, driven by key events and group bookings. The CEO underscored the company's focus on capturing more transient business, enhancing customer service, and investing in loyalty programs and renovations to boost occupancies. While discussing future expansion plans, von Aulock dismissed the idea of closing down or selling establishments, emphasizing the company's strong portfolio of properties and the potential for higher returns from renovation projects compared to investing in new properties. He highlighted the internal focus on maximizing the value of existing assets and expressed confidence in the company's strategic direction moving forward. In conclusion, the interview with Marcel von Aulock provided valuable insights into Southern Sun's financial performance, operational strategies, and growth prospects, showcasing a resilient business model amidst challenging market conditions.