The fall of the rand has forced Sun International to stretch its budget for its multimillion-rand makeover of Sun City.
SA’s second-largest hotel group by market value is now expected to spend about R1bn to refurbish the resort, about R200m more than planned.
“The rand/dollar exchange rate has made the costs of imports, particularly technology equipment, more expensive,” says Sun City managing executive Mike van Vuuren
Wi-Fi, for example, will now be free. But the need for more software to make that possible has come at a price, he says.
The last time Sun City underwent any form of renovation was in 1992. Last week it unveiled the first phase of its revamp — a temporary conference centre called SunSky Village, and what will be Sun Park, a multipurpose facility that will be used for conferencing as well as hosting large-scale events.
About R68m was spent to build SunSky Village, even though it will be demolished in November when the upgrade to the entertainment centre is complete. Renovations to the entertainment area include its retail outlets, casino, arcade and the Valley of the Waves.
Colin Jonkers, group retail manager, says the new stores will include Kauai, Exclusive Books and RocoMamas.
The rand has depreciated by more than 30% against the dollar in the past year. Not only has this stoked inflation and interest rates, but many businesses have been forced to practise austerity in a bid to protect margins.
Companies have shortened conferences and this has affected Sun City. “Previously, clients would book three-day conferences. Now we have had to offer one-day packages to accommodate the tough environment,” says Nicholas Forsythe, Sun Resorts GM of events, conferencing and sport.
Sun International is not the only hotel and leisure chain likely to be affected. Tsogo Sun is redoing its 500-room complex in Cape Town’s city centre for R680m, after completing upgrades to Gold Reef City and its Sandton Sun hotel last year.
Nasdaq-listed Marriott International, which bought out the Protea Hotel Group, is building two hotels in Melrose Arch. Neither of the companies would comment on the impact of the weak rand on their projects.