Business model – Tsogo Sun hotels

KEY FEATURES

The proposed split of the group into three listed businesses would result in Tsogo Sun hotels following the prevalent international trend of operating the business on an 'asset light' basis. In South Africa the portfolio philosophy would change to control the components of the business through secure lease tenures rather than majority ownership of the properties. The components of the hotel business are land, buildings, operations, management and brand.

In South Africa the group will only manage operations for third parties if they are strategically important (due to partner requirements or location) and where there is no option to own or lease. We will manage operations for third parties offshore as this is a low-risk option to enter new markets. We operate hotels as a franchisee where necessary due to brand differentiation requirements but we are not a franchisor of our own brands.

Tsogo Sun hotels' key differentiator in South Africa is our wide distribution of quality, budget through to luxury, hotel products. In addition to quality product, consistent exceptional guest experience remains the focus at all Tsogo Sun hotels to differentiate in an often commoditised industry.

The majority of Tsogo Sun hotels' occupancy depends on the business traveller, government and group and convention markets. Relationships with key customers and travel intermediaries, and access to the correct distribution networks, are critical in driving both occupancies and average room rates throughout the hotel division.

The customer rewards programme in the hotel division is important as 33% of hotel revenue is contributed by active reward club members.

  • Luxury brands

  • Full service brands

  • Selective service brands

  • Budget brands



  • Northern Cape

    Kimberley

  • Western Cape

    Cape Town

    Caledon

    Hermanus

    Mossel Bay

    Plettenberg Bay

    Beaufort West

  • Eastern Cape

    East London

    Mthatha

    Port Elizabeth

  • Free State

    Bloemfontein

  • North west

    Rustenburg

  • Gauteng

    Johannesburg

    Pretoria

    Vereeniging

    Magaliesburg

  • Limpopo

    Polokwane

  • Mpumalanga

    Mbombela

    eMalahleni

    Hazyview

  • KwaZulu-Natal

    Durban

    Pietermaritzburg

    Newcastle

    Winterton

    Umhlanga

    Richards Bay

    Ulundi

  • International markets

    9 37 United Kingdom

     1 Nigeria Lagos

    1 1 Zambia Lusaka

     2 Mozambique Maputo and Tete

     1 Tanzania Dar es Salaam

     1 Kenya Nairobi

     2 Seychelles Mahé and Praslin

     1 UAE Abu Dhabi


FOOTPRINT

      as at 31 March 2018     Group revenue
contribution
%
  Group revenue
contribution
%
 
      Owned/leased     Managed     Total  
Tsogo Sun operated     Hotels Rooms       Hotels Rooms       Hotels Rooms    
Luxury     3 410       3 695       6 1 105       1   1  
Full service     27 5 524       4 854       31 6 378       13   10  
Select service     25 4 563       2 516       27 5 079       8   8  
Budget     22 1 741             22 1 741       1   2  
South Africa     77 12 238       9 2 065       86 14 303       24   21  
Offshore     7 1 038       3 523       10 1 561       4   2  
Total 2018     84 13 276       12 2 588       96 15 864       28   23  
Total 2017     81 12 659       12 2 675       93 15 334       29   24  
Third-party operated                                          
  HPF owned     12 2 635                 12 2 635       3   7  
  IHPL owned(1)     9 1 135                 9 1 135              
  RBH managed(1)(2)               62 8 635       63 8 635              
Total 2018     105 17 046       74 11 223       179 28 269       31   30  
Total 2017     102 16 389       49 8 156       151 24 545       31   29  

(1) Equity accounted and thus not included in revenue and Ebitdar
(2) Excludes five hotels (749 rooms) managed on behalf of IHPL