INVESTMENT CASE
WHY INVEST IN TSOGO SUN HOTELS?
Quality assets • Ownership • Customer-centric • Brand recognition
• Financial strength • Community development • Centralised management structure
HIGH-QUALITY ASSETS IN KEY LOCATIONS
We operate high-quality hotels in which we invest significant amounts to continually maintain and improve.
The location of the majority of our hotel properties in urban areas throughout South Africa maximises public exposure and ensures access to critical supplies and services.
The wide geographic distribution of our hotel properties in South Africa is mainly in key urban centres and is an important market differentiator.
1
High-quality assets
Location
Geographic distribution
The 83 hotels owned or
leased by the group
represent
80%
of our total rooms
2
VAST MAJORITY OF ASSETS OWNED
Our portfolio philosophy is based on a preference to own all components of the hotel businesses (land, buildings, operations, management and brand) wherever possible.
Although this approach can be more capital intensive, we believe it facilitates superior returns on effort, avoids the challenges of joint ownership and ensures control over strategic assets is retained.
Of the 111 hotels operated by the group, we own or lease 83 (representing 80% of our total rooms) and manage 28 for third parties.
RESPONSIVE TO CUSTOMER NEEDS
We seek to deliver the high quality accommodation, conferencing, dining and eventing experiences that our guests desire.
The Tsogo Sun Hotels rewards programme and SunRands currency provides us with detailed information about trends across our customer base and the activities of individual clients. This enables us to improve our offering in response to changing consumer behaviour and to meet the demands of top tier active rewards club members more effectively.
3
Participants in the reward
programme contributed
36%
of total rooms revenue
for the year ended
31 March 2020
of strong brand recognition
4
STRONG PORTFOLIO OF BRANDS
Within each region, the group operates hotels across a number of well-recognised brands, servicing a broad spectrum of travellers from luxury to economy.
Over our 50-year heritage we have achieved strong recognition within both the corporate and consumer markets in South Africa and Africa.
By having a centralised marketing department and plan, marketing spend at individual units can be re-directed, and in some cases rationalised, to focus on marketing initiatives that are beneficial across our entire portfolio. In recent years this has enabled efficiencies to be made in our marketing efforts, reducing cost and improving brand alignment.
FINANCIAL STRENGTH AND DURABILITY
In order to withstand the impacts of macro-economic cycles, we aim to ensure that debt is used prudently, with regular monitoring of our leverage ratios and other covenant requirements including interest cover and loan to value (‘LTV’) ratios.
The group also ensures availability of sufficient credit facilities with long-term maturities, providing additional sources of liquidity.
5
Use debt prudently
Monitor our leverage ratios
and other covenant requirements
Group’s combined social
investment in community
development
R11 million
during the year ended
31 March 2020
6
COMMITMENT TO BROAD-RANGING STAKEHOLDERS
We are committed to the upliftment and development of local communities. Key guiding principles in respect of the communities within which we operate commit us to actively engage in partnerships that bring measurable benefits to stakeholders, enable us to achieve our long-term business goals, and to support organisations which aim to strengthen and develop civil society.
During the year ended 31 March 2020, the group’s combined social investment in community development amounted to R11 million. This is the equivalent of 9% of net profit after tax and represents 8% more than the tourism sector code target.
We consider ourselves a leader in the empowerment of previously disadvantaged people, businesses and communities in South Africa.
CENTRALISED MANAGEMENT STRUCTURE AND HIGHLY EFFICIENT USE OF TECHNOLOGY
The scale of the group has enabled the implementation of an integrated approach across our hotels.
This approach maximises the use of our assets and resources under a unified management structure and within a common corporate identity. This allows us to enhance the experience we offer our guests across multiple properties, ensures consistency across our product offerings and assists the market to understand the scale and diversity of our operations.
Taking advantage of our scale, our strategy is to centralise administrative functions so as to realise efficiencies and ensure the consistent application of corporate policies throughout the business. Processes and systems are automated where appropriate, meaning that our portfolio can be expanded without any consequent need to increase administrative resources.
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An integrated approach
under a unified management
structure within a common
corporate identity
