Johannesburg — THE sharply slowing economy and losses at the recently opened Monticello Grand Casino and Entertainment World in Chile dragged earnings at hotel group Sun International lower in the six months to December.

With hindsight, the group could not have picked a worse time to have opened the resort , just as the full effect of the credit crisis became apparent.

"If we ... ask which was the worst month to open Monticello, it would be October 2008. It was the start of the mass panic on the financial markets and has gotten worse from there," Sun International CEO David Coutts- Trotter said yesterday.

However, the group is confident of strong growth once the economy picks up and Monticello remains vital to Sun International in the long term with limited gaming opportunities left in SA.

"We have had a strong sign-up on our loyalty programme, and once the facilities are fully open, visitor numbers and revenues will improve significantly," he said .

Due to tight construction deadlines, the casino opened ahead of the retail and entertainment component, due to open in May , and the 150-room hotel, due to open in August.

Sun International has had to incur a further $236m cost in Chile to assist certain concessionaires at Monticello's entertainment areas.

"Most of these vendors are cutting back at a time we are asking them to expand into our facility. Some are finding it hard to secure finance, and as they are vital to our operation, we have stepped in to help," Coutts-Trotter said.

During the first six months, the group saw earnings before interest, tax, depreciation and amortisation (Ebitda) slip 2% to R1,367bn, while margins were eroded by 2,6 percentage points to 34%. However, the group achieved revenue growth of 6% to R4bn.

Gaming revenue, the group's lifeblood, grew 5% to R3,074bn, largely impeded by slowing revenue at GrandWest in Western Cape and Boardwalk in Eastern Cape.

"Consumer confidence remains low. While lower fuel prices and a drop in interest rates has put more money in people's pockets, it does not mean they are spending more. People are worried about their jobs and that has affected some of our key operations."

GrandWest revenue was 4% below last year and Ebitda down 6% at R343m. Boardwalk saw revenues and Ebitda fall 6% to R217m and 4% to R89m respectively.

Hotel revenue was more robust, rising 13% to R474m. The group achieved overall occupancy of 77%, down from 80% last year, while the average room rate improved 14%, its Zambian properties benefiting from a favourable exchange rate.

Coutts-Trotter said this year's outlook was worrying. The group had expected this and next year to be excellent due to the Lions tour, the Confederations Cup and the 2010 Soccer World Cup. "However, these events will now help us have a satisfactory year and not a dismissal one."