Sun International makes a play for gaming and online as it returns to profitability
CEO Anthony Leeming says it will make a concerted push in the online space in future
Anthony Leeming, the CEO of hospitality, casino and gaming group Sun International, says the group is looking to catapult growth by driving its online presence, where online gaming and sports betting divisions have reported record numbers.
The owner of Sun City is also focusing on getting its resorts back into stronger profitability as lockdown restrictions ease and international travel slowly gains traction.
The hospitality sector was arguably the hardest hit by the pandemic lockdowns. To survive the Covid-19 storm, Sun International cut costs, which included reducing staff.
“Restructuring is done, the business is in pretty good shape all round,” Leeming told Business Day on Monday, highlighting that there were one or two areas it would continue to tweak, “but nothing significant like we’ve done”.
Operational restructuring at resorts and hotels resulted in R180m in annualised cost savings at Sun City alone. The cost optimisation initiatives identified and implemented over the past two years imply an adjusted ebitda margin improvement on the 2019 results from 28% to 34%.
Its headline earnings were R265m, compared with a loss of R409m in 2020, Sun International said in a statement on Monday. Its casino operations and alternate gaming — which includes online betting and limited payout machines — delivered increased income of 22% to R4.72bn during the review period.
Its budding SunBet business, where the online platforms are offered, generated record income of R182m during the year, boosted by a 41% rise in new players. Though SunBet is still quite small, Leeming sees great potential in it. The company is also rapidly scaling up its premium sports and online betting offering.
“We are looking to create a sort of omnichannel approach, so if we put it in place now, we are going to change our gaming system, so whether you’ll be online or land-based you’ll be using the same platform and the same system,” Leeming said. He added that the move would not be capital-intensive but would generate revenue to cover all the costs and generate significant growth in future.
The group said implementation of Playtech’s Neon casino management system in both land-based casinos and the online SunBet platform is a key component to the omnichannel strategy, which will allow Most Valued Guest customers to enjoy a seamless interaction as they transition between online gaming and land-based casinos.
“We’ll push quite hard in the online space in the future, spend more money on marketing and gear up,” Leeming said.
Online gambling is illegal but online betting and some games where the player bets on the outcome, such as roulette, are allowed.
Growth in online gaming and sports betting has been exponentially driven by increased internet, smartphone and mobile money penetration, and SunBet has rapidly scaled up revenues from mid- to high-end customers.
SunBet’s turnover was up 78% against 2020 and 66% against 2019, while gaming income rose R182m, representing an increase of 33% against 2020 and 30% against 2019.
For Leeming, the trick comes down to balancing how to maximise cash and value and drive the company’s online presence, “because with the move to online gaming and casinos, we believe we have quite an advantage with our brand. So moving in that way is really key.”
Leeming said the casino business had generated good cash flows and the company gained market share in Gauteng while maintaining a steady performance in KwaZulu-Natal compared with a year earlier.
Sun International returned to profit in the year to end-December, with the easing of lockdown restrictions benefiting its businesses, which were dealt a big blow by the Covid-19 pandemic. While domestic leisure travel picked up over the review period, business travel was still in the doldrums, indicating an uneven road to recovery.
Leeming said the outlook for hotels and resorts was positive as business meetings, conferences and related events that had slowed down over the previous two years were making a comeback.
The company is also increasingly focusing on and investing in its iconic Sun City and Grand West locations.
The share price rose 0.38% to end at R23.59 on Monday.
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