IMPROVE OUR EXISTING OPERATIONS AND GUEST EXPERIENCE

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Our strategic priorities in this focus area are:

Integrate gaming and hotel divisions
Improve marketing and sales capability
Review business procedures to achieve efficiencies
Insource key services
Insource food and beverage operations
Deliver on financial goals
 
Although the South African casino market is relatively mature, with a number of established operators, we believe that we can still improve the performance of our properties by growing revenue into new areas, being more competitive and driving operational efficiencies.

Historically, the Group operated within two defined silos: a gaming division and a hotels and resorts division. After a review of the operating environment and our strategy, the Group has undergone a process to change our operational structure to integrate our hotels and resorts and gaming divisions so that they now function as one team with one reporting line (the COO). We believe this will enable us to leverage our unique resort property portfolio to increase revenue (in particular gaming revenue) across all our properties.

The business is now segmented by geography: 
  • South Africa
  • Other Africa
  • Latin America
Between geographic regions we are still seeking to foster much closer collaboration on both our approach to how we do business and our approach to our guests. So if you're a Platinum Most Valued Guest (MVG) at the Federal Palace in Nigeria, and you fancy a game of golf at Sun City, no problem!

Our General Managers at each unit are now being incentivised at both a unit and Group level, to foster a Group-oriented mindset.

We believe that our assets can be better leveraged as a key competitive advantage to attract gaming guests both domestically and also from previously untapped international source markets.

The Group has an enviable depth of management, many of whom have been with us for their entire careers. However, I feel we may have started to lose our ability to see and do things differently or innovatively. The approach to gaming and casino operations has evolved in other regions of the world, many of which deal with the same challenges that we now face. To make sure we learn from their experiences, we have successfully recruited a fresh international perspective into the business with the appointment of Stuart Wing as COO. Stuart has extensive global gaming experience in the Australian and New Zealand casino industries, which from a market and regulatory perspective are not dissimilar to South Africa. Initially contracted as a consultant, he has now been brought onboard to assist in driving many new initiatives that have been identified as opportunities for improving performance.

In the process of interacting with him as a consultant, and indirectly interviewing him, I raised a number of questions with Stuart, including:
 
STUART WING
Chief Operating Officer
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Q: What excites you about the prospects for Sun International? 
 
imgSun International really is a unique organisation – it is a globally competent casino operator but, more importantly, has an amazing portfolio of unique properties, with a diverse spread of operations, and is a premium five star hotel operator – probably number one in South Africa. And South Africa is a great country! 
 
Q: What similarities are there between the Australian and South African gaming markets?
 
imgThe Australian market is highly competitive, generally characterised by having a single casino in a town, but with a number of electronic gaming machines in the immediate area. So the challenges facing the industry are similar. The scale and product offering of casino properties in South Africa is similar to what you see in Australia, and the infrastructure is similarly sophisticated. Customer bases and their behaviours, as well as the regulatory and union framework are also similar.
 
Q: What initiatives can be implemented to further grow revenue in a mature market?
 
imgThere are a number of programmes that can be implemented to improve penetration into existing markets. In markets where we are not the sole supplier – like Johannesburg and Durban – there is a great opportunity to become more competitive. We can leverage the intelligence we gather from, for instance, the implementation of the EGS and our Customer Relationship Management (CRM) system, to drive powerful changes in guest behaviour.

I would argue that relative to the competition, we have a superior offering with largely irreplaceable assets – no one is going to build another Sun City. So there are plenty of opportunities for growth in the domestic market as well as for expanding our offering internationally.
 
Q: Are we operating efficiently in terms of structure and costs?
 
imgGiven the generally higher cost of operating in both New Zealand and Australia, casino operators in that part of the world have had to get extremely efficient and there is no doubt that there is an opportunity to change the way that the Group operates to achieve efficiencies without impacting on guest experience.
 
Q: How about marketing and sales – is there room for improvement?
 
imgAbsolutely. In hotel sales, you can argue that we have been under-represented in key growth markets – in particular Asia. As the traditional markets of Europe are not showing strong growth we should reconsider how best to approach those markets on a cost-effective basis.

To put it simply, the marketing and sales approach needs to become more focused and the skills base needs to be improved.
 
Q: And the importance of the internet as a marketing and sales channel? What should we be doing to strengthen our online presence?
 
imgThe website needs to get better and more efficient, including the online booking function. The next stage is the optimisation of the properties, so that Sun International improves its ranking in search engine listings. We also need a branding exercise to improve the look and feel, as well as include further functionality.
 
Stuart stepped into the role of COO on 1 July 2013 following the retirement of Garth Collins (and many, many thanks to Garth for his enormous contribution). Since then we have been busy implementing a number of the initiatives identified, both by him and by the existing management team, to improve our performance.

It is clear that the guest experience is a central thread that unites many of our ongoing strategic initiatives. In this industry, there is little differentiation to be had in slot or table games; instead it is the experience we consistently offer our guests and their families that will keep them choosing Sun International. Our unique properties are a clear competitive differentiator that we can better leverage to offer a great guest experience, but there is more that can be done: 
 

Potential to insource

Housekeeping and food and beverage are key touch points for our guests, and it is important for the Group to ensure that the guest experience is enhanced as far as possible in these areas. Many of these services are currently outsourced to service providers and we are reviewing these arrangements and questioning whether we are optimising guest experience, revenue generating opportunities and the wellbeing of the employees involved. Insourcing would increase our control over areas like service quality and training, and let us guide guest excellence initiatives to a greater degree. 
 

Improve marketing and sales capability

We are currently developing a new brand strategy and have appointed a brand strategist/PR manager to augment our skills base in this area. With an enhanced focus on attracting gaming guests from international markets, we are repositioning our sales teams in the key source markets of the United States, Latin America, Middle East and Asia. We are also opening offices in Australia and Singapore and establishing sales teams in key African countries.

To align our marketing structures with the new operating model, we have integrated gaming and resort marketing and Group entertainment under one manager.

The Group's gaming marketing ensures that all our guests enjoy the best value-for-money gaming experience possible. This includes ensuring that the latest and most popular machines and games are on our casino floors, guest service is of the highest standard, gaming promotions are innovative and exciting, and that we provide our guests with high quality entertainment and a comprehensive and varied range of food and beverage facilities.

The individual property brands feature consistently in the industry as major tourism attractions in southern Africa. 
 

Review and refresh most valued guest offering

In the gaming industry, it generally holds true that most revenue is generated from a small percentage of players. Our MVG loyalty programme remains our key value offering to top players and is available in all Group casinos, including Monticello in Chile where it has become the benchmark. The programme has four card tiers, each offering distinctive privileges to members at all Sun International hotels, resorts and casinos, with benefits becoming increasingly valuable as guests progress up through each level. The MVG Platinum card qualifies our toprated MVGs for the very best rewards across the Group. This exclusive card gives our top players the status, benefits and recognition they deserve in acknowledgement of their patronage. The MVG Platinum card is highly sought after by our guests, and continues to be the best-performing sector of our customer base. 

We are researching and conceptualising the evolution of the MVG loyalty programme to ensure it remains relevant and creates value for the Group and our guests. We continue to offer exclusive entertainment and gaming options across all our properties to ensure our MVGs enjoy the benefit of being loyal customers.
 

Integrate our customer relationship management and gaming systems

The optimisation of our CRM technology is ongoing, with specific work streams focusing on maintaining data quality, and growing our capability in digital channels such as the web and social media. We are also adding online capabilities to our customer contact centre, to interact and transact with our guests digitally.

We have identified the most appropriate system to achieve these aims, which should be fully operational within the year ahead.

The CRM system is just one of the many IT-related initiatives that we are busy with and that should enhance our guest experience. In today's gaming world the "Business" and "IT" disciplines are converging rapidly and we require extremely close cooperation between the two. At present we are well advanced in the installation of the EGS which is replacing our aging in-house developed Casino Management System. The new technology is based on modern architecture, which enables online and mobile capability and has been enhanced with unique features for Sun International's operations. We have worked with Bally Technologies to create a cutting edge (in global terms) gaming system utilising smart card technology that also offers Groupwide functionality – which means that whichever of our properties countrywide you choose to enter, your card will instantly be recognised – and due to the "smart" card we will immediately know your preferences – not just your points, but being greeted with "Welcome to Sibaya – would you like the same gin and tonic that you had at GrandWest?".

In a casino environment the experience is about winning and the strength of the Bally product is its advanced enterprise bonusing options that engage and excite guests. We can also run targeted mini jackpots and wide area progressives, where our guests at different casinos can play against each other, competing for the same prize.

In addition to CRM and EGS, our hotel and resort systems are being upgraded to provide a fully integrated view of our guests. We also plan to extend our MVG loyalty programme across our properties – one loyalty card that is recognised and for which points are earned, not just in gaming but in our hotels and restaurants.

Achieving operational efficiencies in the "back of house" part of our business is also a key component of our drive to improve the performance of existing operations. We are introducing an ERP system that will streamline business processes across various functions in the Group (finance, human resources, procurement), reducing not only systems costs but enabling us to better monitor and manage functions such as procurement and the utilisation of resources such as electricity.

Given all that is happening in the IT space, a man with a lot of pressure on him is our Chief Information Officer, Thabo Ndlela.

Thabo has been with the Group for three years and joined at a critical time in the evolution of the IT/business interface. He is currently managing IT-related projects with a cost of around R1 billion and so I interact with him frequently to question and make sure that all is on track: 
img THABO NDLELA
Chief Information Officer
Q: How is the EGS implementation going? Where are we on timing and budget?
 
imgThe project has been successfully been deployed at Morula, Carousel, Carnival City, Meropa and Sun City. We are very happy with not only the implementation but the way in which the operational staff and our guests have adapted to it. All South African operations will be complete by June 2014, and the system will be rolled out at Monticello in Chile during the 2015 financial year. As we move on to our larger properties, the team has benefitted from the learning curve developed over the past six months. We do not anticipate any implementation issues, we are ahead of the anticipated time frame and we are on budget.
 
Q: Regarding our guest experience, will EGS interact with our CRM system and what improvements can we expect?
 
imgYes, our CRM system pulls information from EGS to support what we call a 'single view of the customer'. For instance, the sharing of data is helping to thrill our guests with our advanced interactive guest interface. We are using smart card technology (which also helps with cash management by reducing our exposure to running cash around the casino) and our iView touch screens to deliver a host of additional features on our machines. These include targeted one-to-one communication and marketing, and loading and redeeming points.

CRM is being extended to include hotel guests while supporting campaign management and leads generation. It leverages master data management, sourcing information from across the transactional gaming, hospitality and enterprise business applications. It pulls guest information to one place, giving us a view from room and concert bookings, to gaming preferences and entertainment interests. It will drive improvements in the analytics of our business and guest behaviour.
 
Q: Is it necessary to implement an ERP system and what benefits are there to be gained?
 
imgThe ERP system is essentially a back-office system that will consolidate 15 systems deployed in 96 versions used across the Group. The scope includes finance, human resources, supply chain, project and document management, and areas like plant maintenance. Our goal is to fundamentally change and improve operations in these areas.

This project has a number of benefits. First off, it's about reducing cost – we are targeting a saving of around 42% in systems costs over seven years. Bear in mind that this is just a systems cost saving – there is the additional benefit of consolidating functions throughout the Group.

Secondly, it will help us automate key business processes. There are currently a number of processes that require manual facilitation, for instance, in capturing time and attendance, scheduling shifts, and applying leave conditions. The ERP system will introduce consistent internal controls and help reduce human error.

Also, with one system you have consistent architecture, making system support simpler throughout the Group. And the system will be centralised – so we will no longer have multiple instances of applications running at different properties across the Group.
 
Q: Which ERP system have we chosen and how long will implementation take?
 
imgAfter extensive due diligence, including participation from all affected users, we have decided to go with IFS, a European-based ERP system. We have also appointed Accenture as the systems integrator. We are planning to commence implementation during the current financial year and should be complete within 24 months at a cost of R150 million.
 
As can be seen, we are undertaking a number of initiatives in the IT area and this is a trend that we can expect to continue as improvements in technology continue to drive developments in our industry. In recognition of this, and as highlighted in the Chairman's report, we are seeking external and independent expertise to join our IT governance committee, to which we will appoint an individual with relevant global gaming experience.

In summary, as I look at the operations side of the business, there is a lot that we are doing to ensure that we continue to show improvement in revenues, operate efficiently and enhance our guest experience in an environment that is increasingly competitive. I am confident that with all the steps being taken we will maintain our position as the premier gaming company in South Africa and further entrench our reputation as a globally competent manager of casinos, as we seek out new opportunities in other jurisdictions. 
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