South Africa’s Tsogo Sun Hotels on Friday reported a 9% fall in annual core earnings and did not declare a final dividend, due to a sharp drop in local and international travel amid the coronavirus pandemic.
Tsogo Sun said earnings before interest, income tax, depreciation, amortisation, rent, long term incentives and exceptional items (EBITDAR) for the year ended March 31 fell to 1.4 billion rand ($79.65 million), from 1.5 billion rand a year earlier.
One of South Africa’s biggest hotel groups, with brands such as Southern Sun and Garden Court, said the first nine months of trading saw demand by corporate and leisure groups as well as the transient traveller showing little signs of recovery as consumers and firms rein in spending in a struggling economy.
Subsequent international travel restrictions and a total ban on inter-regional travel to curb the spread of the coronavirus had an impact on the group’s fourth-quarter trading, with international demand shrinking as early as February.
All Tsogo Sun hotels in South Africa, the rest of Africa and the Seychelles have been closed, with the exception of those designated as quarantine facilities or as accommodation for essential service workers and persons awaiting repatriation.
The company, which also operates casinos, said lenders to Tsogo Sun Hotels and its subsidiary Hospitality Property Fund have approved the waiver of September covenants.
It said it has temporarily laid off employees and has had to reduce pay for all levels including executive management and board members.
The group is also seeking rent relief from landlords during the lockdown and for subsequent low demand periods, and has negotiated reduced or extended payment terms with major suppliers.
“Trading during the first nine months of the financial year was impacted by the depressed local macro-economic environment with demand by corporate and leisure groups as well as the transient traveller showing little sign of recovery,” the company said.
The pandemic had a marked impact on fourth-quarter trading with international demand falling as early as the last week of February, the company said in its first set of annual results after its unbundling from Tsogo Sun Gaming Ltd.
Tsogo Sun Hotels, one of many tourism companies to be hit hard by virus outbreak, has also temporarily laid off employees and has had to reduce pay for all levels including executive management and board members. Tsogo Sun shares are 65% lower year to date. ($1 = 17.5768 rand)
(Reporting by Tanishaa Nadkar in Bengaluru; Editing by Rashmi Aich and Shounak Dasgupta)
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