South African hotel and casino operator Tsogo Sun has been expanding some of its largest casino properties across the country while awaiting for better economic times to come, CEO Marcel Von Aulock said in a Friday interview for Bloomberg.
This year, South Africa is expected to report its worst economic growth figures since 2009. However, Tsogo Sun will keep on investing in the expansion of some of its major casino properties across the country. For instance, the amount of R2 billion is to be spent on the addition of more space and gambling options at Suncoast Casino and Entertainment World.
South Africa is Tsogo Sun’s core market. The company operates both casinos and hotels around the country. Despite the fact that South Africa has been experiencing harsh economic times, the hotel and casino operator has managed to post a 6% growth in gaming wins and a 9% increase in revenue at local casinos for the fiscal year ended March 31, 2016.
Unlike its biggest South African rival Sun International, Tsogo Sun is not looking to expand casino operations outside the country. The company owns casinos in other southern African countries but its casino business will remain focused on the South African market. Tsogo Sun holds a 40% share in its domestic gambling market.
Mr. Von Aulock pointed out that the main reason it is not interested in expanding casino operations in other markets is the lack of experience and better knowledge of regulations and gambling customers in other jurisdictions. The official also explained that this kind of expansion is not necessary at this point.
Foreign hotel markets, however, are of interest to the major operator. Tsogo Sun is considering the possibility to build an “economy hotel” in Maputo, Mozambique.
As for its expansion strategy within South Africa, the company hopes that it will be allowed to add a bigger gambling venue in Cape Town by moving the license from a smaller one. Mr. Von Aulock said that local regulations need to be changed first in order for this to become possible. According to the executive, they may be allowed to apply for relocation some time towards the end of the year.
Tsogo Sun is also in anticipation of a regulatory approval that would allow for the purchase of a controlling interest in Hospitality Property Fund, South Africa’s only real estate investment trust focused on investing exclusively in the leisure and hospitality sectors.
