“Tsogo has a business that consumers like to spend money on and then it has an element, which we like very much, it has the ability and the scope to spend lots of capital on developing this further,” Piet Viljoen, the founder and executive director of RE:CM, told CNBC Africa.
“Building out those economies, earning high returns on that additional capital they’re putting in, which we think compounds quite nicely – that’s a good deal for our clients.”
Tsogo Sun is one of the country's dominant leisure and gambling groups. With 90 hotels and 14 gambling venues in South Africa, Viljoen believes that a part of the appeal lies in the fact that competition is limited in this industry and that there are barriers to entry.
The gaming, hotel and entertainment group revealed that it had made 150 million rand available to develop its Silverstar, Gold Reef City and Montecasino operations in Gauteng.
“Any business that people like to spend money on can generally be a good business and entertainment is one of them. Gaming is entertainment, people like spending money on entertainment so that is conducive to high returns on capital,” Viljoen explained.
Tsogo Sun CEO, Marcel Von Aulock, is determined to make the group’s Monte Casino operation the entertainment hub for the northern suburbs.
“Monte Casino, we think is the most successful casino complex and entertainment complex in the country. It’s completed about four phases of development so far, it’s going into its fifth phase. That model of regular, repeat-visit entertainment, where it is just the default destination that you go to if you live in that area, is what we want to roll out at the other properties,” he said.
Von Aulock insists that acquiring licenses is crucial and disclosed that the group is rolling out the Monte model, which involves multiple forms of entertainment.
“If you don’t have the license, you’re not in the game, you can’t get into the game. The big catalyst that enabled why we pushed the button now was we needed the increased gaming capacity and that took a long time but we’ve got that through – about a 30 per cent capacity increase. We spread that out across the three properties and that will take two or three years to roll out.”