The hotels and leisure sector is worth almost R40bn in market capitalisation, with nearly half of that accounted for by Sun International (SI). Together with its gaming peers Gold Reef and Peermont, SI and the gambling companies dominate the sector, with a combined market capitalisation of around R26bn.

SI had another great year, with both its gambling and hospitality divisions performing well. The one big disappointment was that it failed to consummate a casino deal in Russia.

"In terms of a new gambling dispensation being introduced in the Russian Federation, casinos will only be permitted in four remote zones," says CEO David Coutts-Trotter. "Together with our Russian partners, we will continue to investigate potential opportunities in the Moscow region in the event that further zones are legislated."

There was some consolation early in 2007 with the news that it has entered into a joint venture with Chilean partners to exploit the potential of the Chilean gambling scene.

The FM's Hot Pick for 2007, Gold Reef Casino & Resorts (Gold Reef), is SA's fastest-growing gaming company, with most of that growth arising locally. Gold Reef City is its biggest profit contributor by far, but Mykonos showed the fastest growth in revenue and profits last year. Silverstar, the new casino on the West Rand, will open in the first quarter of 2008. The group has concluded a BEE deal that will result in a shareholding of at least 25,1%.

After a brief but exciting period on the JSE, Peermont Global was bought out by a consortium that includes the Mineworkers' Investment Company and delisted in April this year.

Tourvest's outlook started to change for the better last year and indications are that the improvement should continue in the lead-up to the Fifa World Cup in 2010. The combination of 8% growth in foreign tourism to SA, an 11% depreciation of the rand and the remedial action taken by CEO Tommy Edmond and his team led to a distinct improvement in performance in the group's interim results. Tourvest made a number of acquisitions after the end of the interim period.

Famous Brands - owners of the Steers, Debonairs and Wimpy brands among others - put its stamp on the fast food industry early in 2007 with its acquisition of the Wimpy brand in the UK. This audacious move paves the way for further international expansion in years to come.

City Lodge eventually turned down the bid from Hospitality Group for the company's entire issued equity at R60/share. With hindsight, it was a great decision, as the share price has more than doubled to over R80. The group's occupancy levels are at a record high of 83%. But CEO Clifford Ross believes this can be improved.

IFA Hotels & Resorts SA, a subsidiary of the Kuwait-based IFA Group, listed on the JSE in early 2006. IFA owns Zimbali Lodge on the KwaZulu Natal north coast, a 50% share of the Zimbali Coastal Resort, 19,25% in Boschendal wine estate and recently concluded a joint venture with Ohlthaver & List in Namibia. This will enable IFA to develop a portfolio of four hotels and resorts worth about R550m in Windhoek, Swakopmund and the Oshikoto and Caprivi regions.

One of the smallest shares in the sector, The Don Group, was again the best performer, with its share price virtually doubling in 2006.