28 08 2008
Radio 702
18:07
World at Six
6 Minutes 34 Seconds
Presenter: Lets talk first to David Coutts-Trotter who is the Chief Executive of Sun
International – reported just 3% profit growth, issues affecting retailers and banks
hurting them as well and that’s as the consumer has taken a bit of a bludgeoning in the
last six to eight months or so. Have you done some research into consumer behaviour
Dave, in terms of actually where people are spending their money rather than putting
it into the machines and on the gaming tables?
David Trotter: The bit of research and the evidence that we have and obviously look
into and looking at others research, there’s no question the consumer has less sort of
discretionary disposable income. If you take off bond repayments and payments on
cars and the other committed expenditures whether its school fees or medical
expenses etc, there’s a lot less left at the end of the month. So if we look at it, our
visitor numbers are not dramatically down, but each person is spending a little bit less
on a visit and people are a little bit more careful and certainly over the last couple of
months. So if we look at the year, it started off…the growth was a lot better in the first
quarter and then its progressively slowed and particularly in the second six months.
Presenter: So how have you – its one thing to encourage feet through the door but its
another thing to try and encourage people to pay to actually play the games that you
have on offer. You’re forced then to make the payouts a little bit more certain, if that
the gambling term?
David Coutts-Trotter: No. There’s not a big change of approach there. We have
tended always to have a pretty high payback on our machines. If you look at the table
games etc, the dials are pretty much fixed. So there’s not a lot of change there.
Presenter: Okay. And when you have a look at the hotel business, this is quite
interesting because it’s the first time I’ve ever seen it anyway that the hotel business
has actually grown faster than the gaming business.
David Coutts-Trotter: Yes that’s correct. I think its the first time in probably recent
history…I think if you go back in time when this has happened previously, but
certainly if you go back over the last seven or eight years, I think you’re absolutely
right.
Presenter: And the hotel business side, there seems to be a nice renaissance at Sun
City. You’ve got the bed nights up there, the occupancy rates are nice and high,
you’ve also got the room rates going up there – probably some of the more
adventurous pricing within the Sun International Group is at Sun City. The popularity
of Sun City seems to be coming back quite nicely.
David Coutts-Trotter: I think we’ve done a lot at Sun City both in terms of
renovation and working on our service levels and standards and continually sort of
upping, raising the bar there. It remains a very, very popular destination with local
people, particularly people from the Gauteng area, but is still very popular with
international visitors and we’ve managed to pick some very nice pieces of
international business particularly on the big conference side which helped us over the
past year, despite the fact we had quite a bit of disruption in the main hotel where
there’s a huge refurbishment programme underway, which comes to an end in
November this year. So in the second half we’re actually anticipating over the second
half of the next year that there could be some further gains at Sun City.
Presenter: And also the Table Bay and the Royal Livingstone, that depends largely I
would assume on foreign travel and you’ve seen a nice uptick there as well. Are you
getting a greater share of the foreign market or are there just more foreigners coming
in?
David Coutts-Trotter: I think there has been some growth in the foreign market and
we like to think we may have increased our share. We have pushed into some new
and sort of emerging international markets including Russia, India etc, where we have
grown some volumes quite nicely, so we probably have gained a little market share,
but international visitation continues to grow and I think the outlook is quite good
looking forward particularly with the sort of two-tiered effect, the Confed Cup next
year…historically remains, despite the challenges, a popular destination.
Presenter: You spent a lot of money no doubt on Charlize Theron. Have you had a
return on investment there? Can you attribute any of these gains to Charlize being part
of your marketing campaign?
David Coutts-Trotter: Look, I think its early days for that. You know Charlize is a
medium term project that’s very much a brand-positioning exercise. One would like
to think so. But its probably early days for that. We really only launched it sort of well
into the second part of the year.
Presenter: Have you used her internationally as well? That would be a shame not to.
David Coutts-Trotter: We’ve used her in South Africa at this stage. Principally that
really is the big benefit we see. The vast majority still of our visitation if you look
across all our properties above the casino and the hotel, the vast majority of our
visitation comes from South Africans, so we’ve used her exclusively in South Africa.
Its really not affordable for us to use mass media in places like the UK, for us to be
going on television etc. although its a great market for us. We’re taking a very small
percentage of that market so that’s not cost-effective so we use much more direct
methods of selling and marketing in international markets.
Presenter: David Coutts-Trotter who is the Chief Executive of Sun International,
thanks very much indeed for your time. Sun International – casinos taking a bit of
strain. The revenues at all of the casinos rising, all of them are profitable but there
were some declines at actually three or four of them and one of the big ones, Grand
West just outside Cape Town, actually saw its profits down from R594 to R591
million. Not huge, but it does just show that there is some pressure. Carnival City is
another one that’s taking strain as well. Sun International’s contention is that its
because there are now seven casinos in the Gauteng area. But if you live in the southeast of Johannesburg are you going to drive 50 km to another casino? If times are
tight, no you’re just not going to go to the casino or if you do go as they say, footfalls
are still going through the doors, you’re just not going to take as many chances
perhaps, maybe just not put any money on the table this time round. Certainly an
interesting story. Gambling, but hotels business actually growing quite nicely.