Tsogo Sun Holdings Ltd is one of the leading casino providers in the African continent and also runs a number of hotels in the region. The company has invested a significant amount of money to upgrade and expand its existing casino facilities as it remains positive that the South African economy will recover in the coming months and thereby boost revenue at all casino and hotel properties.
Marcel Von Aulock, the Chief Executive Officer for Tsogo Sun Holdings Ltd stated that the company had almost completed its transformation process which included adding more betting machines to its casinos and increasing the square meters of its properties. Since most of the work has now been completed, the company is waiting for the economy to receive a boost which will result in more consumer spending thereby increasing overall casino revenue.
The company derives 65 percent of its revenue from the gaming industry and around 30 percent from its hotel business. The company which is headquartered in Johannesburg runs the Gold Reef and Montecasino entertainment complexes and has finished upgrades to its third and fourth biggest casinos in the region. Tsogo Sun Holdings Ltd also plans to invest an additional $139 million to expand and enhance its Suncoast gaming and entertainment complex in Durban.
South Africa’s economy has slowed down considerably this year and analysts expect 2016 to be the slowest growth rate since the recession of 2009. Tsogo generates nearly 90 percent of its revenue from the South African market and so far has managed to increase its gaming wins by 6 percent and hotel revenue by 9 percent till March 2016. The company’s shares have increased by 18 percent this year and by 4.7 percent on the FTSE/JSE Africa All Share Index, which has given the company a market value of 30 billion rand.
Sun International Ltd which operates many hotels in other African nations is the biggest competitor for Tsogo. The company has decided to follow a different expansion strategy by focusing on international markets but Tsogo Sun has confirmed that it has no such plans for the immediate future and prefers to focus on South Africa. The company has been reluctant to launch in new countries at this point of time due to the uncertainty of gaming legislation, market conditions and unfamiliar regulatory procedures.
Von Aulock stated that the company currently has a number of projects lined up in South Africa which includes adding a new Cape Town casino and gaining regulatory approval to get control of a Johannesburg-listed Hospitality Property Fund. Von Aulock did not rule out the possibility of expanding internationally but only when they ran out of projects in South Africa.