Johannesburg - JSE-listed City Lodge Hotels’ R1 billion expansion into sub-Saharan Africa is gaining momentum and it expects to open three new hotels in Africa outside South Africa by the end of next year.
The group also hopes to unveil its planned 148-room City Lodge Hotel Maputo in Mozambique in the first quarter of 2018.
Andrew Widegger, the financial director at City Lodge, said approval of the inward investment for the hotel by the Central Bank of Mozambique was still outstanding but believed this approval was imminent.
Widegger said the group hoped to begin construction on this hotel this quarter, adding it already had the construction licence, planning approval and had gone out to tender.
He said the group had “called off” the opportunity for a hotel on a site in Kampala in Uganda because the feasibility did not work.
However, Widegger said the group had not given up on the idea of building a new hotel in Uganda and it was looking at a few other sites in Kampala although it had not commenced any negotiations yet.
The opening of the City Lodge Hotel Maputo, together with the expected opening next year of a 151-room Town Lodge Hotel in Windhoek in Namibia, two new City Lodge-branded hotels in Nairobi in Kenya and a City Lodge Hotel Dar es Salaam in the fourth quarter next year will increase the number of hotels in the group to more than 60.
The group currently has 57 hotels, of which 54 are in South Africa, one in Botswana and two in Nairobi that provide a total of 7 072 rooms.
Clifford Ross, the chief executive of City Lodge, said the group continued to look at other opportunities in Africa and had been to look at the Ethiopian and Rwandan markets but had decided it was not the right time to get into these markets because of the pipeline of new hotels going into those two countries.
Opportunities
“But we will keep an eye on those two countries because we are sure that at some time there will be an opportunity for us,” he said.
Ross added that there were still opportunities for City Lodge in Kenya, not only for a Road Lodge in Nairobi but for other group-branded hotels in second cities in Kenya, and it was watching developments closely in Zambia, Mauritius and Zimbabwe.
“There are a lot of opportunities and in time (we) will make those announcements,” Ross added.
City Lodge on Friday reported a 13.2 percent increase in normalised diluted headline earnings a share to 859.9c in the year to June from 759.9c in the previous year.
Total revenue grew by 14.6 percent to R1.49bn from R1.3bn.
Average occupancies were negatively impacted by lower business confidence, poor consumer sentiment and negligible economic growth and decreased by 1 percentage point to 66 percent.
Widegger said average occupancies were below the group’s long-term average of 73 percent, adding the group’s lowest average occupancy rate of 56 percent was achieved in 2011 after the soccer World Cup in 2010.
Widegger said mid-week public holidays were very detrimental to the normal flow of business travel and “really kills 10 days of our business”, particularly as two-thirds of the group’s hotels were inland.
A final dividend of 248c increased the dividend for the full year to 517c, which was 12.4 percent higher than the 460c dividend declared in the previous year.
Shares in City Lodge rose by 0.65 percent on Friday to close at R164.73 on the JSE, while the JSE’s travel and leisure sector rose 1.39 percent.
BUSINESS REPORT