SOUTH AFRICA – Hotels and leisure group Sun International has announced the closure of its Naledi and Carousel hotels, charging that the Covid-19 pandemic had forced it to review its operations to save costs.

The group said lockdowns imposed to contain the spread of the pandemic had cost it millions, leaving it with an excess of more than 2200 employees across its operations in the iconic holiday resorts of Sun City, Maslow Sandton, Boardwalk, The Table Bay and Wild Coast.

The group said it planned to cut its head count by at least 2300 after it was forced to halt its operations for three months as a result of the Covid-19 outbreak. The group said the proposed retrenchment exercise has an estimated total cost of employment of R280 million (US$16.75m).

Chief executive Anthony Leeming said the pandemic and the associated lockdowns tested the group’s resilience to the limit.

“The Covid-19 pandemic required us to undertake a deeper review, as we anticipate that it will take some time for our properties, in particular our hotels and resorts, to recover,” Leeming said.

Leeming said the group had already enacted a retrenchment process in Chile, with voluntary retrenchment packages involving about 1000 people. He said 451 employees had accepted voluntary retrenchment processes.

“The Covid-19 pandemic has hit the gaming and hospitality sector particularly hard and forced us to make some tough choices to protect the business and to as far as possible limit the impact on employment,” Leeming said.

The group said it was also in the process of closing the Naledi and Carousel Casinos as part of its accelerated the disposal of non-core assets.

Sun International announced the disposal of its 65percent interest in Sun Dreams for US$160m (R2.65billion) about 10 days ago, with the proceeds to be used to settle the group’s debt in Chile and South Africa.

The group also completed a right offer and raised R1.2bn to assist with liquidity during the pandemic and subsequent recovery.

The planned job cuts come after the group reported a 56percent decline in consolidated income to R3.7 billion (US$221.39m) for the six months to the end of June and a 96percent fall in earnings before interest, tax, depreciation and amortisation to R79 million (US$4.73m).

The group said its adjusted losses swung to R885 million (US$52.95m) from a R172 million (US$10.29m) profit last year. It said the adjusted headline losses came to 702cents a share.

Leeming said the closure of the group’s operations during lockdown provided an opportunity to undertake an in-depth review of processes, operating structures, systems and guest offering and experience.

“This review resulted in the identification of costs savings in outsource and service provider contracts, IT systems and other general costs of more than R250 million(US$14.96m),” Leeming said.

He said the recent announcement of the move to level 2 of the lockdown to allow inter-provincial travel is a positive step, but they will be opening Sun City in September.

“The Table Bay and The Maslow Sandton will, however, remain closed until there is sufficient demand to justify their reopening,” Leeming said.

Liked this article? Subscribe to DealStreet Africa News, our regular email newsletter with the latest news, deals and insights from Africa’s business, economy and more. SUBSCRIBE HERE