Southern Sun has attributed record earnings in 2024/5 to robust trading in Gauteng and the Western Cape, counteracting a dip in performance from its hotels in Durban and Maputo.
Releasing its financial results (for the year ended March 31, 2025), the group reported a 9% rise in total income and a 14% increase in earnings before interest, taxes, depreciation, amortisation and restructuring or rent costs (Ebitdar) to R2.2 billion (€108 million). Occupancies across the group’s portfolio increased slightly by 2.2% to an average of 60.8%.
Gauteng and Western Cape shine
Southern Sun CEO Marcel von Aulock said the refurbishment of Sandton Towers in Johannesburg’s economic hub, completed in December 2024, was well received by the market. Upgrades to the Southern Sun Rosebank and Southern Sun Sandton additionally contributed to an overall 35% boost in Ebitdar for Gauteng to R491 million (€24.1 million).
“The domestic and international corporate transient travel segments have recovered well with demand for conferencing and events bolstering hotels located in prime business hubs near OR Tambo International Airport or Sandton Convention Centre. By leveraging our relationships with sporting bodies, corporates and government, and with a refurbished restaurant and bedrooms, the Southern Sun Sandton has gained traction in the market and trading levels have significantly improved,” said Von Aulock.
Refurbishment of the Southern Sun The Cullinan in Cape Town, completed in July 2024, together with a general rebound in leisure and business tourism demand, were key factors in driving a 26% growth in Ebitdar for the Western Cape to R1.1 billion (€54 million).
“Cape Town has benefited from foreign inbound travel and large-scale conferences and events across all segments, which boosts demand for accommodation and drives volume and rate growth in the region,” Von Aulock pointed out.
Durban and Mozambique struggle
Muted performance at Southern Sun’s KwaZulu-Natal and Mozambique properties is indicative of challenging operating environments in Durban and Maputo.
Ebitdar contributions from KwaZulu-Natal declined by 14% to R247 million (€12.1 million), affected by a decline in demand from the corporate and government sectors in the lead-up to national elections last year and delayed approval of South Africa’s national budget this year.
Von Aulock pointed to reduced events activity at the Durban International Convention Centre as a concern together with negative publicity surrounding Durban’s beachfront and inner city.
“Infrastructure and safety concerns have impacted Durban’s desirability as a tourist destination. However, there have been positive steps made towards correcting this perception. Umhlanga continues to perform well and, as a key growth node to the group, opportunities to increase its room stock in the region are continuously evaluated,” Von Aulock said.
Ebitdar for the group’s offshore division (including hotels in Mozambique, Seychelles, Zambia and Tanzania) fell by 45% to R51 million (€2.5 million), largely due to lack of corporate demand at Southern Sun and StayEasy Maputo, and violent post-election protests across Mozambique.
“This has had a significant adverse impact on trading levels in both hotels and demand is yet to return to normalised levels. The hotels have reduced costs where possible,” Von Aulock explained.
To deal with lack of demand from the European leisure market in 2024/5, Paradise Sun Seychelles closed for a full refurbishment on April 1 this year to “reposition as a premium leisure resort”.
Trading at Southern Sun Ridgeway in Zambia was slightly ahead of 2024 levels while trading levels at Southern Sun Dar es Salaam in Tanzania – which reopened in October last year following refurbishment – remained muted.
Prospects
Von Aulock expressed hope for the implementation of policies that drive economic growth and visa openness.
“Announcements by the Department of Home Affairs simplifying requirements for port of entry visas and visa regulations for China and India indicate government’s commitment to promoting tourism in South Africa, which will benefit the group’s portfolio in all regions given its national distribution and ability to successfully host and coordinate large conferences.”
While softening of inflation and suspension of load shedding are positive signals, high interest rates, together with uncertainty surrounding the sustainability of South Africa’s investor-friendly Government of National Unity, remain threats, Von Aulock said.
“Given the political and economic turmoil domestically and internationally, the group believes that its internally focused strategy is the right one to navigate these uncertain times. The group will continue to pursue its strategy of getting more out of its irreplaceable hotel portfolio by allocating capital to key properties,” he said.
