Southern Sun sees mixed performance amid refurbishments, local growth

Southern Sun Limited's trading update for the five months ended August 2025 reveals a mixed financial picture. South African operations saw a 9.7% increase in room revenue, driven by a 1.6 percentage point (pp) rise in occupancy to 59.2% and a 6.7% increase in average room rates. This growth was boosted by strong demand for Eventing, Groups, and Conferencing in the Western Cape and Gauteng, despite muted transient travel from government and corporate segments.

Conversely, the group's offshore segment experienced a significant decline in average occupancy, falling 13.1 pp to 33.4%. This was primarily due to the closure of Paradise Sun in Seychelles for major refurbishment, alongside continued weak trading in Maputo and subdued business in Tanzania. Consequently, the group's overall occupancy marginally increased by 0.7 pp to 57.8%, with average room rates up 4.0%, leading to a 6.4% growth in total room revenue.

The group's strategy remains internally focused, with several refurbishments completed in the first half of the financial year, including Paradise Sun. Earnings for the first half will be impacted by refurbishment costs and cost pressures in IT, utilities, and channel costs, with September trading expected to be muted. Southern Sun is also pursuing expansion opportunities in the Western Cape and KwaZulu-Natal, leveraging its strong balance sheet, having repurchased ZAR79 million worth of shares and paid a final dividend of ZAR335 million.