How Sun International is dealing with load shedding

FIFI PETERS: While we are hearing quite a bit about how load shedding is having a devastating impact on small businesses, forcing some to close, big business is also feeling the pinch from the increased power cuts. We’ve heard from the likes of property group Growthpoint, as well as telecoms operator Vodacom. They’ve had to roll out a whole lot more generators and batteries to keep up with the demand from their customers.

For more insights on how load shedding is impacting the hospitality industry, I’m joined by the CEO of Sun International, Anthony Leeming. Anthony, thanks so much for your time. We’re looking at power cuts that we last saw at this scale back in 2019, before we even knew of something called a Covid-19 pandemic, essentially. But what has this meant for your business in the past week or so?

ANTHONY LEEMING: Good evening, Fifi. The truth is we haven’t been that impacted; we do have generators. The big impact would be cost. So potential disruption, because sometimes your UPS doesn’t kick in, you’ve got to check your batteries. So spending on equipment is probably the biggest issue – and then diesel. We are burning a lot of diesel at the moment, which is not great for anyone. I think longer term the indirect impact is the real concern to the economy.

FIFI PETERS: Sure. Are you able to quantify those costs at this stage? I know they’re probably still being calculated – but if you can?

ANTHONY LEEMING: We are still busy calculating. I know they’re going to run into millions every month. Especially at this level load shedding is going to cost a lot of money.

FIFI PETERS: What’s that going to mean for the cost of your product offering?

ANTHONY LEEMING: It probably will not shift much. It depends on whether this goes on long term – then it will have a longer-term impact. At this stage we are still managing to do it, but it all depends how long it goes.

FIFI PETERS: Do you find that people holiday more, or want to visit a hotel or visit a casino slot a lot more when there is load shedding, compared to when there isn’t?

ANTHONY LEEMING: A lot of people like to get out. I know the takeaway industry is definitely benefiting from it – that’s when you can get service. So yes, people don’t want to stay at home, they do tend to go out. But right now we’re still dealing with people coming back, the mask mandate being dropped one of the exact reasons. So we probably haven’t noticed that it’s due to load shedding. But there are probably other factors also. Traffic is a little worse and the roads are all dark, and it’s not the best time to drive. So it can have a positive and negative impact.

FIFI PETERS: But would you say it’s mostly positive – like what we are seeing with the takeaway industry – or is it neutral at this stage?

ANTHONY LEEMING: I would like to think neutral at this stage. Some people will go out, but it’s pretty neutral. As I say, we could try to calculate if we are back to fulltime normal with the mask mandate, being able to show some concerts – those are the big issues.

FIFI PETERS: Just talking about the bigger issues, then, how has the market responded to the dropping of the masks? And even with the dropping of the vaccine certificates and entering the country, what have you seen since effectively all the Covid-19 restrictions were removed?

ANTHONY LEEMING: Well, certainly from travel we are looking forward to a good footfall, but this is not traditionally your high tourist season. So dropping the mandates won’t be solved……3:16 yet, but we are looking at quite a positive output for the end of the year in terms of tourism arrivals, [especially] from overseas, and we do expect a much better season than we’ve had in the past. So a good fourth quarter is probably where we are going to benefit from these relaxations.

FIFI PETERS: We speak to business and business is [asking] why you would invest in a country where the situation around power right now is so fluid, and it is impacting and causing people to rethink or think twice about coming to park money here. I’m wondering if you are concerned or if you have seen a rethink among foreign travellers wanting to visit here, saying, okay, load shedding might spoil my holiday.

ANTHONY LEEMING: Look, we haven’t seen that and got that direct feedback yet. But I think there’s no doubt this has a negative impact on the country and a negative sentiment definitely turns into fewer visitors. So at this stage we wouldn’t say we’ve had that impact, but there’s no doubt – it will turn down to a negative sentiment towards the country.

FIFI PETERS: Anthony, what is your honest view about the situation that we find ourselves in as a country? Many of us know we’ve been dealing with the headache of load shedding for the better part of 10 years, and things are progressively getting worse, it feels. What’s your take on the state of SA as it pertains to load shedding right now?

ANTHONY LEEMING: Look, not very good. I think it’s been a political issue for too long and it hasn’t really taken a real business interest. I think that it’s been far too politicised over the last 20 years, or 15 years, and therefore the total incompetence and just [has not had] the right people, right focus and right attention. So if you’re trying to win political points, that’s the way you do it, although I can’t imagine they are winning even at the moment. But we haven’t taken a real economic assessment of the situation, and therefore put the right plans in place.

FIFI PETERS: And at a personal level, as Sun International as a business, how are you thinking about investing in an economy right now that is struggling to keep its lights on?

ANTHONY LEEMING: Look, we are still doing some small investments, getting expansion of a hotel in Cape Town. We are going to do a ……5:27 at Sun City. So you do believe that these situations will be resolved; it’s just taking longer and it’s coming at a cost. But certainly I think in the future we’ll probably not be an aggressive investor, but we are looking at a few growth areas here and there where we see opportunity.

FIFI PETERS: Just on those costs, as you mentioned you have sufficient generators up and running to keep the lights on at all your establishments. Okay, cost is hitting you in terms of diesel and we don’t quite know when the pressures will alleviate from the diesel price, but we also know that at a large or a bigger policy level companies do have the option to invest in their own power, more secure power, and be less dependent on an Eskom and less hurt by what happens with load shedding.

So what’s your immediate thinking around that – a more renewable future for Sun International? What are you doing there?

ANTHONY LEEMING: We are very close. We are investigating all the options, some wheeling……6:26 agreements, and some on property solar installation. So we are at the stage of getting close to making decisions, to invest in our own sort of power sources. We use power pretty evenly throughout the day, so solar can help us during the day, but not during the night. So you’ve got to have other alternatives, such as wind potentially, but we are not going to be doing wind. So you need to buy the power through the grid.

The problem there is the municipalities want to charge a fortune. If it comes direct from Eskom, it’s not too bad, but the municipalities are all charging too much for …….6:59 and becoming a real hindrance. And …… sort of private guys have big sort of wind farms and they are obviously into the grid and you buy their power; but you can’t and you have to pay a lot of money for wind and it gets prohibitively expensive.

FIFI PETERS: We look forward to seeing what you decide on once your investigations in that renewable route are wrapped up. But, Anthony, are you hiring in this environment?

ANTHONY LEEMING: Well, at the moment I think we need a lot of skills. We have a skills shortage at the moment, and a lot of people are leaving. We are hiring where needed, but we’ve certainly not being aggressive. But where we need it, I think through Covid, there was a lot of non-replacement of staff and we’re finding right now there are areas where we need to recruit.

FIFI PETERS: All right. Anthony, thanks so much for your time. Anthony Leeming, the CEO of Sun International, [has been] speaking to the impact of load shedding on Sun International’s operations. Not too bad so far, it seems, from the CEO. But of course, that situation can change, depending on how long the load shedding situation goes on for, and how aggressive the power cuts do become.