Johannesburg – Africa’s premier hotel and gaming group, Tsogo Sun, is banking on improved tourism numbers in the future as it continued to add to its impressive portfolio by acquiring the Hospitality Property Fund (HPF).

The merger between Tsogo Sun and Hospitality Property Fund (HPF) was approved by the Competition Tribunal last week.

As part of the transaction, Tsogo Sun will acquire a controlling stake in Hospitality by vending a portfolio of 10 hotel properties in exchange for the issue of Hospitality ordinary shares.

However, the merger is subject to conditions accepted by both parties, and that a merger clearance certificate has been issued.

Conditions

The merger must also meet a number of conditions, including that the merging parties ensure that the HPF has its own executive management team, which will be responsible for day-to-day operations of the HPF.

The team will not include anyone who is involved in management in any capacity at Southern Sun.

Tsogo Sun was encouraged when the tourism numbers at the beginning of 2016 showed a significant growth from international tourists.

Chief executive Marcel von Aulock said the group saw a number of tourists, mostly from the US, spend their holidays in South Africa due to the rand depreciating alarmingly against the dollar last year, which helped the group.

Tourism Minister Derek Hanekom gave the industry a thumbs-up when he said in January more than 1 million tourists arrived in the country, 15 percent more as compared to January 2015.

February saw the numbers growing even further with 18 percent more as compared to February 2015. The trend is expected to continue for the rest of 2016.

Tsogo Sun shares have gained more than 20 percent on the JSE since the company released its annual results to the end of March and showed a 12 percent increase in profits.

“With consumers under financial strain and continued negative sentiment due to macro-economic conditions, trading during this financial year has been challenging.

“But we are expecting a good year going ahead,” said Von Aulock during the results presentation.

The share price closed 1.37 percent higher on the JSE on Friday at R31.88, up from R21.50 a share since the company released the end-of-year results in March.

Investing

Tsogo Sun’s portfolio includes more than 90 hotels and 14 casinos throughout South Africa, the rest of Africa, the Seychelles and Abu Dhabi.

Tsogo, which gets about 65 percent of its profit from gaming and 30 percent from hotels, is investing even as the South African economy is forecast this year to grow at the slowest pace since a 2009 recession. The owner of Montecasino and Gold Reef City has completed upgrades at its third- and fourth-largest casinos and would spend about R2 billion to expand its Suncoast gaming and entertainment site in Durban.

The company had also invested in hotel refurbishments and acquiring properties that it previously leased.

Source: www.iol.co.za – Sandile Mchunu