TSOGO Sun, the country’s largest hotel and casino operator with 90 hotels and a market cap of R34bn, targets mainly middle-class South Africans.
In the past four years, it acquired hotels, expanded in gaming and bulked up on machines to be well placed for economic recovery.
“It might take longer than we think, but the economy will turn,” says Tsogo CEO Marcel von Aulock.
Tsogo Sun, with brands Southern Sun, InterContinental and Garden Court, operates in seven African countries.
A year ago, it invested $70m in a hotel in Nigeria and spent $30m on expansion in Maputo. In 2012, Tsogo bought the remaining stake in Formula One chain from Accor for R300m and renamed it Sun1.
The group opened a hotel in Abu Dhabi last month. It is spending R630m upgrading Gold Reef City. In Durban, is has revamped the Elangeni and Maharani and will spend R1.8bn expanding the Suncoast complex. It is spending R560m expanding the Silverstar Casino in Muldersdrift.
Elsewhere in Africa, there are no plans to expand casinos. “There isn’t big demand,” says Mr Von Aulock.
Sun International, with a market cap of R12bn and 27 hotels, has a different strategy. The group has mainly four-and five-star hotels, and is more resort-oriented than Tsogo. Last year it launched SunBet for “sports mad” South Africans. It has applied to relocate its Morula licence from Mabopane to Menlyn and invest R3bn in the process. It is expanding the Vacation Club at Sun City, and spent R1bn to upgrade its resort in Port Elizabeth.
The group is looking at Latin America; it has Monticello Casino in Chile, and is opening a casino in Panama. It is also focused on bringing out high rollers from Asia.
• This article was first published in Sunday Times: Business Times