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Tsogo Sun to temporarily close 36 hotels

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Tsogo Sun Hotels Limited has released a statement saying it will need to temporarily close 36 hotel properties around the country over the next few weeks as a result of a rapid decline in demand following the global COVID-19 coronavirus outbreak.

It noted in a JSE Sens statement after the market closed on Friday that the group’s forward bookings for April through June reflected “a total collapse of demand” as a result of the impact of COVID-19 and “accelerated travel bans”.

The Group said that as a result of the collapse of demand, it needs to reduce costs and capital expenditure. “In order for this to be achieved, a reduction of excess capacity is required. This will be implemented through an orderly deactivation of a number of hotels in the key nodes where the Group has multiple properties and consolidating the available demand into the remaining operating hotels in those areas,” the statement reads.

The Group said it has the ability to reactivate this capacity on short notice should they see an upturn in demand. All booking channels will remain active for the close monitoring of demand patterns in addition to the Group’s web booking and call centre functionality.

In areas with a single hotel such as outlying areas in South Africa and some of the other African countries or hotels where the saving through deactivation is minimal, such as in the budget market, the Group will assess demand on an ongoing basis while ensuring the operating cost of these hotels are reduced to a minimum.

The first phase will affect up to 36 hotels representing 7 700 rooms (or 40%) of the Group’s portfolio over the next few weeks. There are a number of consultations and planning logistics to be finalised, however the group intends to still retain significant operating capacity in its key nodes for the foreseeable future.

The Group is working on the assumption that hotels will begin to be reactivated by no later than July 2020 and that the corporate and government travel sectors will recover relatively quickly.

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