JSE-listed Tsogo Sun Hotels – South Africa’s largest hotel operator with 112 properties – slashed 1 000 staff members from its workforce last year amid the Covid-19 financial fallout.

The group’s CEO Marcel von Aulock confirmed the extent of the job cuts in an interview with Moneyweb on Thursday, following the release of its annual results for the year ended March 31, 2021.Moneyweb InsiderINSIDERGOLD

Tsogo Sun Hotels, which was unbundled from Tsogo Sun Gaming in 2019, saw its overall hotel occupancies plummet to a record low of just 12% for the financial year.

This was largely due to the Covid-19 pandemic, with restrictions to travel, hotel operations and events. The group and most of its peers were forced to close the bulk of its hotels during the hard lockdown last year, but kept several hotels closed due to lack of demand even as restrictions were eased.

Read: Covid-19 recovery will take years – Tsogo Sun Hotels CEO

Tsogo Sun Hotels reported a revenue plunge of just over R3.3 billion for its financial year, resulting in an operating loss of R177 million.

“We have never had such low hotel occupancy levels or seen a business environment like this …. This meant that we had no option but to restructure and ultimately cut around 1 000 staff [members],” says von Aulock.

“During the global financial crisis around 2008, we had occupancies of circa 50%. In the late 80s and early 90s during the height of apartheid sanctions, hotel occupancies may have hit 35%-40%. This gives you an idea of what a terrible year it was last year due to Covid-19,” he adds.

He says that while around 1 200 staff were retrenched during the year, the group taking on operations of a few Marriott-managed hotels (that were part of the Hospitality Property Fund portfolio) meant that it also took on around 200 staff members.

Read: Historic Edward and Mount Grace hotels to reopen under Tsogo Sun

“The job cuts were one of the hardest decisions we had to make. With most of our hotels closed for almost three months last year during the initial hard lockdowns, the first quarter of the group’s financial year was essentially a write-off,” says Von Aulock.

“We had to slash salaries by as much as 40% in all levels of the business, including executive level.”

“With Covid-19 continuing we had to cut staff and restructure the group, in addition to other cost-cutting and liquidity enhancing measures. Following the retrenchments, our workforce has been reduced to around 6 400,” he adds.

One of the other tough decisions was the sale of the group’s iconic Seychelles Maia Resort stake for R465 million, which brought in much-needed cash to bolster liquidity and even cut some of its debt in the face of the Covid-19 crunch.

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