City Lodge parks dividend after a coronavirus-induced R486m loss
JOHANNESBURG - City Lodge Hotels parked its final dividend payment for the year ended in June as it fluttered to a R486.6million loss on Covid-19 economic fallout on its hotels.
The group said yesterday that it was not planning to pay dividends in the short term, given the impact of Covid-19 on its operations and the minimal revenue earned since the declaration of a national disaster in March.
“The declaration of future dividends remains subject to satisfying solvency and liquidity requirements,” said the group, adding that its earnings fell from a R205m profit a year earlier amid hotel write-downs.
City Lodge said it experienced a R344.6m fall from net of tax, related to the impairment of property, plant and equipment along with right-of-use assets of some hotels.
“The impairments are due to management’s assessment of the negative impact of Covid-19 on forecast cash flows generated by the underlying hotels and increased risk assessments that had a material impact on discount rates applied across the portfolio,” said the group.
Total revenue tumbled 25percent to R1.16 billion, while operating costs excluding depreciation decreased 24percent.
City Lodge reported a headline loss of 388.1 cents per share compared to headline earnings of 561.7 cents.
The group said that the average occupancies for the year had declined from 55percent in the previous financial year to 38percent.
In South Africa, occupancies decreased from 58percent in the previous financial year to 41percent.
It said the decline represented a further 16-percentage-point fall from the occupancy for the six months to end December.
The group said that the easing of lockdown measures had resulted in the gradual re-opening of approximately 32 of its 62 hotels across South Africa and the rest of Africa based on demand.
It reported that the construction at Courtyard Hotel Waterfall City had resumed and was progressing well. “We anticipate a four-month delay compared to original pre-Covid-19 estimates, with an anticipated opening of all 168 rooms in March or April,” said the group.
The 148-room City Lodge Hotel Maputo opened its first 68 rooms in the second week of February, with a further 54 rooms becoming available in March, and the completion of the remainder put on hold due to the impact of lockdown on trading.
“The completion of City Lodge Hotel Maputo will bring to an end the current phase of the group’s targeted expansion strategy in southern and east Africa,” said City Lodge.
The group reported that on completion of Courtyard Hotel Waterfall City and City Lodge Hotel Maputo, the group would offer 8 070 rooms at 63 hotels.
“The group’s hotels remain ready and flexible to open at short notice based on guest demand while ensuring strict adherence to our industry-leading hygiene and safety protocols to ensure the safety and well-being of our guests and staff,” it said.
City Lodge declined 1.81 percent on the JSE yesterday to close at R2.72.