How much money Southern Sun’s Sandton powerhouse makes

Southern Sun’s Sandton Consortium generated R318 million in revenue and R99 million in earnings in six months.

Southern Sun Hotels was formed in 1969 through a partnership between hotel magnate Sol Kerzner, who founded Sun City, and South African Breweries. 

At the time, Southern Sun Hotels was the largest hotel group in the Southern Hemisphere. The group started with six hotels, including the Beverly Hills Hotel in Umhlanga, near Durban.

Today, Southern Sun operates six hotel brands, eight individually branded luxury properties, and the Sandton Convention Centre.

One of the company’s key assets is its Sandton Consortium segment, which reflects the trading performance of the Sandton Sun and Towers complex, the Garden Court Sandton City, and the management fee income earned from the Sandton Convention Centre. 

In 2022, Southern Sun rebranded the InterContinental Sandton Towers Hotel to Sandton Towers.

The two properties offer a combined 557 rooms. Sandton Towers has direct access to the Sandton Convention Centre, and Sandton Sun is the only hotel on Sandton Sun’s Diamond Walk.

The Garden Court is a hotel adjacent to Nelson Mandela Square and a 2-minute walk from the Sandton Convention Centre. It boasts over 444 rooms.

The Sandton Convention Centre is South Africa’s leading event venue, offering prestigious multi-use event spaces and venues in the financial hub of Johannesburg.

It is one of South Africa’s largest multi-purpose event and conference venues and has hosted events like Miss World, the Arnold Classic South Africa, and the FIFA World Congress.

In its results for the six months through September 2024, Southern Sun revealed the revenue and earnings this segment generates before interest, taxes, depreciation, amortisation, and restructuring or rent costs (Ebitdar).

In the six months, the Sandton Consortium generated revenue of R318 million, down slightly from R333 million in 2023 and Ebitdar of R99 million, down from R105 million. 

The company explained that the decline in revenue (5%) and Ebitdar (6%) is because 2023 provided a high base since the BRICS Summit was hosted at the Sandton Convention Centre in August 2023.

This led to a substantial demand for accommodation at the surrounding hotels, which did not repeat in the current financial year.

In addition, Southern Sun had to close the Sandton Towers for a full bedroom and corridor refurbishment expected to be completed by November 2024.

However, the company’s properties are still performing well, with room revenue growth of 7% to R1.99 billion, supported by average room rate growth of 3%.

In addition, Southern Sun reported an increase in occupancy of 2.6 percentage points to 58.9%.

Food and beverage revenue was up 4% to R760 million, in line with occupancy growth, and property rental income has grown by 21% to R114 million.

Southern Sun said this was despite a slowdown in travel and accommodation demand from the corporate, government and leisure segments in the lead-up to the national elections in May 2024. 

“While corporate and leisure demand returned post-elections, the government segment has been slower to normalise, which we anticipate will happen during the second half of the financial year,” the company said. 

“Recent announcements by the Department of Home Affairs regarding the simplification of visa processes are encouraging developments for the South African tourism industry.”

Overall, the Southern Sun’s operating costs were tightly controlled over the six-month period, increasing by 5% compared to the prior comparative period. 

In addition, the suspension of load-shedding resulted in diesel savings of R23 million, offset by an electricity cost increase of R19 million, largely due to tariff increases.

Despite the Sandton Consortium being located in Gauteng, housing most of the Southern Sun’s most well-known assets, the Western Cape was its most profitable location in the reporting period.

Revenue from the Western Cape grew by 14% to R861 million while Ebitdar increased by 25% to R277 million, with the region contributing 34% to the overall group Ebitdar. 

The company explained that Cape Town has benefited from foreign inbound travel and large-scale conferences and events across all segments.

This boosted demand for accommodation and drove both volume and rate growth in the region.

However, Gauteng is not far behind, with revenue of R785 million and Ebitdar of R232 million, an 18% and 35% improvement, respectively.