INTEGRATED ANNUAL REPORT 2025

STRATEGY AND PERFORMANCE REVIEW

Southern Sun creates long-term stakeholder value by focusing on its strategic objectives: Sustainability and Growth
THE KEY PILLARS OF OUR SUSTAINABILITY INCLUDE:

Sustainability

1 Deliver to our beneficiaries

Sharing value with our beneficiaries is a critical part of maintaining our social licence to operate

Southern Sun is a Level 1 B-BBEE contributor, adding R3.6 billion in value to BEE businesses and government and supporting 65 beneficiaries through the Southern Sun Entrepreneurs programme

2 Product relevance to customer experience

To remain relevant, a variety of quality experiences must be provided at appropriate price points

The group's portfolio of owned/leased properties comprise 16 942 hotel rooms across all market segments, achieving a hotel guest satisfaction score of 83% for the year under review

3 Regulatory compliance

As a multinational business, the group is subject to a wide range of legislation and compliance is critical to our reputation and sustained profitability

No significant regulation breaches

4 Skilled human resources

Qualified, trained, talented and empowered people are required to deliver the Southern Sun experience

At 31 March 2025, Southern Sun had 6 255 direct employees of which 95% were African, Coloured and Indian and 56% are women

5 Financial strength and durability

An appropriate capital structure is important to ensure the business survives through economic cycles

Southern Sun pays dividends in line with an appropriate dividend policy, debt levels were reduced from R1 billion to R266 million, resulting in unutilised facilities plus cash of R2.2 billion

6 Organic growth

Optimal operation of the group’s capitals generates growth in cash flow and thus value

Total income for the group has increased by 9% to R6.6 billion and adjusted headline earnings per share has increased by 34% to 75.6 cents

7 Inorganic growth

Building the tangible and intangible asset base of the group generates growth in cash flow and thus value

Southern Sun acquired land in uMhlanga, adjacent to one of our existing hotels, for future development and continues to actively evaluate acquisition and development opportunities, either independently or in collaboration with suitable partners

Strategic priorities

 
  • Effective corporate social investment (CSI), enterprise development, and environmental programmes
  • Dividend payments to shareholders
 
  • Continuous maintenance capex and strong internal development capabilities
  • Marketing, brand improvement, and channel management
  • Rebranding under Southern Sun’s brand portfolio
 
  • Embedded in corporate culture
  • Seen as an investment, not an unavoidable cost
  • Monitored via ORMS
 
  • Ensuring adequate staffing and skill levels
  • Fostering an engaged workforce
 
  • Prudent use of debt and significant asset ownership ensuring security of tenure
 
  • Maximising performance of existing assets
  • Continued focus on cost efficiency, operational systems and corporate values
 
  • Pursuing new projects and acquisitions

Growth

Growth drivers

Economic recovery

  • RevPar growth: As the economy improves, higher occupancy rates lead to higher room rates through yielding opportunities resulting in increased revenue per available room
  • Cost management: Emphasis on controlling costs to protect profit margins

Portfolio management

  • Operational expertise: Hotel management is complex and labour-intensive, requiring specialised skills
  • Continuous improvement: Ongoing enhancement and strategic upgrades are essential for each hotel to ensure that its offerings remain aligned with market expectations and guest preferences

Location

  • Prime locations: Focus on visibility and accessibility near business hubs and leisure destinations to drive demand

Investment in South African hotels

  • Renovations and development: Upgrading existing properties, acquiring new ones, and pursuing greenfield projects
  • Management contracts: Expanding operational control through contracts within South Africa

Offshore expansion

  • Africa and Middle East: Growth through management contracts
  • UK investment: Strategic investment in a UK-based management company

Capital capacity

  • Debt-equity balance: Maintaining a healthy financial structure
  • Cash flow management: Balancing reinvestment needs with shareholder dividend expectations
  • Flexibility: Adapting to economic conditions to sustain and grow the portfolio

Designed & Developed by The Oak Tree Group