Hotel group City Lodge reported a 19.4 percent drop to 613.4 cents in diluted normalised headline earnings per share for the year ended June 30. Photo: Reuters

JOHANNESBURG  - Hotel group City Lodge reported a 19.4 percent drop to 613.4 cents in diluted normalised headline earnings per share for the year ended June 30, with average occupancies declining from 59 percent to 55 percent.

Total revenue increased by three percent to R1.5 billion, the company said.

In South Africa, occupancies decreased from 61 percent to 58 percent, in line with a three percentage point decline in the six months to December 31 2018.

"Low levels of business and consumer confidence, high unemployment, uncertainty around (power utility) Eskom’s sustainability and land expropriation, as well as negative growth in the first quarter of 2019, resulted in difficult trading conditions," City Lodge said.

Down by three percentage points at the half year, Botswana occupancies improved slightly in the second half, with the improvement continuing into the current year.

Town Lodge Windhoek performed below expectations on weak economic growth in Namibia, but the hotel was improving on a month-by-month basis, the company said.

After a welcome improvement in the first half with occupancies up by four percentage points, Kenyan operations experienced a weaker second half due to increased hotel supply and economic growth not translating into commercial activity.

In Tanzania, City Lodge Hotel Dar es Salaam had a disappointing first few months of trading due to increased hotel supply, a challenging business environment and a shift in some commercial activity as a result of government administration offices relocating to the capital of Dodoma.

City Lodge said given the current economic situation in South Africa, the weaker trend of the past year had extended into the new financial year.

"New catalysts are needed to boost investment confidence and spur economic growth," it said.

"Against this backdrop, there are some encouraging signs, such as the notable efforts by the national department of tourism to develop and grow this industry that is so important to the future of South Africa."

It said its portfolio of hotels in South Africa, southern Africa and East Africa was in excellent shape after ongoing refurbishments and the addition of exciting new properties.

- African News Agency (ANA)