Tsongo Sun Holdings Expands Casino Operations

South Africa’s largest hospitality company and casino operator Tsogo Sun Holdings has expanded its gaming facilities across the country to put itself in a position to take advantage of an upswing in the country’s gaming market whenever it occurs.

Chief Executive Officer Marcel Von Aulock has said that he is confident that the decision to focus on improving and increasing its facilities which include adding new betting machines would pay off once the consumer sentiment, on which the industry is dependent, takes off.

Over 90 percent of Tsogo’s profits are from its facilities in the South Africa. In a statement, Von Aulock said

We’re at the tail end of the transformation of the portfolio. We’ve done all the work, so we are kind of waiting for the uptick to come.

Gaming contributes around 65 percent of Tsogo’s profit while hospitality contributes to around 30 percent. The operator has completed upgrade of its largest casinos and is proposing to spend close to 2 billion rand ($139 million) on expanding its Suncoast gaming and entertainment site facility located in Durban. The company also plans to build a new casino in Cape Town by shifting its license from a smaller facility, for which it has filed a legal case.

Close competitor Sun International is however expected to put up a massive legal challenge to this proposed move.

Tsogo saw an increase in its gaming wins by 6 percent last year despite an economic slowdown in the country, while revenue from its hotels went up by 9 percent. The company currently has no plans to expand its gaming business outside of South Africa even though it runs a number of hotels in other countries in the African continent. Sun International has ventured to not just other parts of Africa but also into Latin America with operations in countries like Panama and Peru.

Tsogo is however planning to expand its hotel portfolio across Africa. One of the projects currently under consideration is an budget hotel in Maputo, the capital Mozambique. Tsogo is also planning take control of Hospitality Property Fund which is listed on the Johannesburg stock exchange in lieu of Tsogo’s hotel properties. It is in the process of getting regulatory approval for it.

Von Aulock believes that the primarily focus needs to be on being present at the right location with the right product. With that in place, the company would be able to benefit significantly once the South African economy starts to turn around.

Adrian Sterne

More articles by Adrian Sterne