PROTECT AND LEVERAGE OUR EXISTING ASSET PORTFOLIO

 
img img

Our strategic priorities in this focus area are:

Optimise South African and other African assets
and licences (potential relocation of Morula)
Redevelopment of Sun City
Protect existing licences

Secure GrandWest exclusivity

Boardwalk expansion
Overcome effect of smoking ban in Monticello
 
The Group has a diverse portfolio of assets including world class five star hotels, modern and well located casinos, some of the world's premier resorts and some older legacy assets that for various reasons may not be positioned favourably anymore. In the past year we have spent significant time and effort in evaluating our asset portfolio and have identified those properties that can be better leveraged, those that need protection and those that may no longer be core to our strategy.

Plans to better leverage our assets include the potential relocation of the Morula casino licence, further development at Sun City and a potential development of unutilised land at our property in Lagos, Nigeria.

Some of our assets under threat include GrandWest where the Western Cape Government is considering allowing a second casino licence to relocate to the Cape Metropole, and Monticello, where we are dealing with the significant negative impact of the smoking ban.

While we have a strategy that actively integrates all of our existing properties, there are some properties that are less strategically relevant than others. We continue to evaluate those that are small yet require disproportionate management time, and those that need investment to maintain standards but are unlikely to generate sufficient incremental return on capital.
 
img 

Potential relocation of Morula

The Group has submitted an application to the Gauteng Gambling Board to amend its Morula casino licence to change the description of the licensed premises from Mabopane to Menlyn, Tshwane. In its current relatively inaccessible location, Morula is battling to compete with the proliferation of gaming products that are targeting the underserviced Tshwane market. We believe that relocating to Menlyn will deliver an entertainment offering not currently available to residents in the region and will also help us deliver the full potential of this licence, to the benefit of the City of Tshwane and the Gauteng Province. Public objections to the application, which closed on 16 August 2013, have been addressed. The Gauteng Gambling Board will schedule a public hearing and thereafter announce its decision.

If approved, the Group plans to create a new R3 billion urban entertainment destination to be known as Time Square on Menlyn Maine in Tshwane's eastern suburbs. The development is part of a new large-scale mixed-use "Green City" project currently under development which, on completion, will be an R8 billion, 315 000m² precinct, of which R825 million is either already built or under construction.

The precinct will comprise a new shopping mall, a high-end residential component, an office park, hotels and an entertainment node. The entertainment node, which Sun International plans to provide, will include a 110 room five star hotel, 8 000 seat entertainment arena, convention and exhibition facility and a casino with 2 000 slots and 60 tables. The proposed development will create a significant number of new jobs as well as materially higher tax revenue for the province.
 

Sun City Redevelopment

imgSun City in the North West province is arguably Sun International's most unique and recognisable asset. It is, however, a capital intensive asset that requires constant refurbishment and upgrading to ensure it remains relevant and can attract a significant number of guests, all with different needs and requirements. A number of development and refurbishment plans are in place, which will ensure that Sun City remains the premier integrated entertainment and convention resort in South Africa. 

Importantly, the improvements to the resort will be self-funded from Sun City's operating cash flows and the proceeds from the sale of a new revitalised timeshare offering.

A five year master plan has been prepared and will commence with the refurbishment and relaunch of the original Vacation Club – around 300 units that are in much demand and are currently being rented on a weekly basis. The refurbishment will bring the units up to the latest Vacation Club standards and include modern green design elements. Interior designers have been appointed and we are establishing an in-house sales and marketing capability with the sales launch planned for November 2013. Initial proceeds of the timeshare sales are earmarked for a refurbishment of the Cabanas and an upgrade to the property's casino facilities, which together with the asset's international reputation will make Sun City a key property in supporting the Group's VIP gaming strategy (as further detailed here).

The intention is to position the main hotel as the adult "always on" zone at Sun City with a focus on entertainment and food and beverage offerings. The entertainment centre itself is to be reconfigured to provide state-of-the-art convention and conference facilities which will position the Group to compete aggressively for meetings, incentives, conferences and events (MICE) business, which will help improve occupancy rates during weekdays.

The Valley of the Waves will be enhanced to provide better family and children's entertainment, directly linked by a bridge to the timeshare units.
 

GRANDWEST EXCLUSIVITY

imgGrandWest is the only casino in the Cape Metropole and as such has been right-sized to service this market. It has been highly successful and today this property is the single largest contributor to Group revenue and profit. GrandWest's 10-year Cape Metropole casino licence exclusivity expired in December 2010 and since then, the Group has been engaging with the Western Cape Provincial Government on securing a further exclusivity agreement. There is currently some debate as to whether a second licence should be permitted to relocate from elsewhere in the Western Cape into the Metropole. The other licences in the province are held by a competitor (three properties) and ourselves (Golden Valley). 

Based on our extensive database of guests, derived from 12 years of operating in the region, as well as the recent low revenue growth experienced at GrandWest, the Group believes that there is no potential for significant additional gaming revenue in the region to justify establishing another large casino in the catchment area of the city.

There have been no further developments in the amendment of regional licence allocation policy and legislation to make an additional licence available in the Cape Metropole region (which in itself will require a public consultation process).
 
 

Broadwalk expansion

imgIn 2010 the Group was successful in its bid to renew its exclusive casino licence in Port Elizabeth, extending it by 15 years. The bid committed to a R1 billion expansion, which has now been concluded. The 140 room five star Boardwalk hotel, conference centre and retail complex were all completed during the year. The hotel opened on schedule on 14 December 2012 and has positioned the property as a highly desirable destination in the Eastern Cape, offering premier conferencing facilities. 
 

Overcoming the effect of the smoking ban in Monticello

imgIn Chile, legislation that came into effect in March 2013 prohibits smoking in public places. There is a significant correlation between smoking and gambling and with immediate effect our revenues at the property dropped by 20%. Remedies to limit the impact on gaming revenues have now been implemented, including the construction of smoking terraces outside the building which comply with the new health regulations. 

Precedent elsewhere in the world indicates that we can expect a recovery in the medium term as smokers adapt to the new regime. The lessons learnt in Chile will be relevant to South Africa in the event that similar legislation is introduced here.
 

Other Initiatives

Other projects under consideration and relating to our existing portfolio include a refurbishment of the Zambezi Sun, a refurbishment of the Gaborone Sun, the potential to relocate certain other underperforming casinos and the development of the real estate at our property in Lagos, Nigeria.
« Improve our existing operations and guest experience Grow our business into new areas and products »
​​​​​​​​
Login

Sun International supports responsible gambling. Gambling for persons 18 years and older. Winners know when to stop.

National Responsible Gambling toll-free counselling line 0800 006 008. Sun International Casinos are licensed Casinos. For more information visit: Responsible Gambling