City Lodge pushing expansion in spite of decline in occupancy

By Sandile Mchunu Time of article published Aug 19, 2019

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City Lodge is forging ahead with its expansion plans despite experiencing a decline in its occupancy rate in the country for the year to the end of June.

The group said in South Africa occupancies decreased from 61 to 58 percent, in line with the three percentage point decline in the six months to December 2018, hurt by low levels of business and consumer confidence, high unemployment, uncertainty around Eskom’s sustainability and land expropriation, as well as negative growth in the first quarter of 2019.

Average occupancies for the group during the period declined to 55 percent, down from last year's 59 percent.

Despite the decline in occupancy rate, the group said it has almost completed its initial targeted expansion into east and southern Africa and opened the 154-room Town Lodge uMhlanga, its 55th hotel in South Africa.

But the completion of the 148-room City Lodge Hotel Maputo has been delayed, due to contractor-related issues.

“Once open, the hotel will become the 62nd in the group, contributing to a portfolio offering 7902 rooms in South Africa, Namibia, Botswana, Kenya, Tanzania and Mozambique,” the group said.

The construction of the 168-room Courtyard Hotel Waterfall City is progressing well, and the first rooms on track for opening in November 2020, with the balance becoming available at the beginning of 2021.

Chief executive Andrew Widegger said their portfolio of hotels in South Africa, southern Africa and east Africa was in excellent shape after ongoing refurbishments and the addition of new properties.

“Our entire operational team is highly motivated to deliver on our brand promise and growing market share in a depressed environment, ideally positioning the group to benefit from better trading conditions as they arise,” Widegger said.

City Lodge released its year results on Friday by reporting a 3 percent increase in revenue to R1.5 billion. Normalised headline earnings decreased by 19.3 percent to R267.1 million and diluted normalised headline earnings per share decreased by 19.4 percent to 613.4 cents.

The group declared a gross final dividend of 137c, bringing the total dividend for the year to 366c, which was 19.4 percent lower compared to last year.

Widegger said the weaker trend of the past year had extended into the new financial year, adding that new catalysts are needed to boost investment confidence and economic growth.

City Lodge shares fell 2.56 percent to close at R95 on the JSE on Friday.


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