the g spot
Sun International: No grand reopening here
We asked Sun International CEO Anthony Leeming if the reopening of hotels will be an exuberant return to life pre-Covid, or whether it’s far too optimistic to expect a spectacular rebound
Sun International, like other casino and hotel groups, is on the verge of reopening, thanks to a further easing of lockdown restrictions. We asked CEO Anthony Leeming if the opening will be an exuberant return to life pre-Covid, or whether it’s far too optimistic to expect a spectacular rebound.
AL: Look, we’re not expecting a grand reopening, it’s not going to jump back to the original levels and I think it will take a bit of time. But the important thing is that we get open and start covering costs, and build from there. We’re not expecting fireworks — and we can’t have that anyway because you have to control the environment quite carefully.
What’s going to open first and when?
AL: We don’t have timelines but we’re expecting the gazette to be published shortly. We are ready to go, we’ve got all the protocols in place and so we expect on very short notice to be able to open. Now, will we open everything at once? No. There’s still a challenge for interprovincial travel, so a place like Sun City — why would you open?
As for our hotels, you’ve got to assess whether there’s enough business. Demand is still very low. Now, leisure might pick up but without interprovincial travel there’s not much choice. We also won’t necessarily splash open all restaurants or bars, so we will have to have selected areas open. We’ve got every second slot machine turned off, we’ve got screens between machines, et cetera.
How much has that cost you? Was it a huge expense?
AL: The expense is nothing compared to the expense of being closed. It’s a few million rands, but it pales compared to what it’s costing us to pay staff 40% of their salaries and ongoing rates and taxes, electricity, water and security, and the other costs that you couldn’t really avoid.
What percentage of last year’s trade do you think you’ll do on reopening?
AL: I think about 50%. If you look worldwide where casinos have opened, there’s been a reasonable rebound quite quickly, certainly around 70%-80% [of capacity] … The SA context is slightly different, so I think it will be lower, but we would hope for at least 50%. You must remember limited capacity doesn’t mean 50% of revenues, because your bigger gamblers make the majority of revenue, so as long as you get most of them back, you should be OK. You have obviously got restrictions on alcohol and there’s the smoking issue, so there are a few challenges all round. It’s so hard to predict that we don’t want to, but we have made plans around [different] levels, so we can respond quickly.
Are you frustrated that businesses have not been granted relief in terms of rates and taxes and so on?
AL: It starts with the municipal wage bill and if you don’t cut there for people not working, like we all share in the pain, that has got to be paid for somehow. Do I expect huge concessions from a tax point of view? I’ve got to say no. Have we asked? Yes, but government’s got to balance its books. Now what’s very disappointing is that, yes, some of the senior guys [in the government] have taken 30% cuts, but, well, we took 60%. And there are guys not working at all who are sitting at home earning 100% of their salary. That’s just not right. For example, gaming taxes: well, they’re not collecting any, but have the government officials that rely on that revenue taken cuts?
You have to rally the troops as CEO, but it’s hard to avoid a collapse in morale. How do you keep your spirits up?
AL: One of the most important things is communication. We send out videos, we have an internal app where we can talk to staff — obviously you have some people who are very disgruntled that we’re not paying them more and you get others who are absolutely thrilled to have got anything. You have to be bluntly honest on the position you’re in, while understanding the position they’re in. As we put it, there’s a balance between liquidity and the ability to look after your staff: if you haven’t got liquidity, you can’t do anything. So we’ve had to rely on banks, and you’ve seen our rights issue, to get the liquidity; now we are better able to look after staff but it doesn’t mean you can just throw money around.
On your liquidity issues, debt is — or should be — cheap now. Would it not have been better to restructure debt rather than go to the market to raise cash?
AL: The banks were asking us, should you [not] consider a rights issue? So we have secured it. We have got underwriters, and we are comfortable that we have the right balance. You can’t just tell the banks to suck it up. Banks would have said "do R3bn" — we’re doing R1.2bn. We’ve still got facilities available, so we don’t feel like the banks are squeezing us, they know they have to work with us.
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