Improved results for the six months to last December have enabled City Lodge to declare an interim dividend of R1.76 a share, up 30 percent from the corresponding period of 2011.

The hotel group reported yesterday that normalised headline earnings increased 31 percent to R126 million with normalised diluted headline earnings a share advancing 30 percent to R2.90. Cash from operations was R222m, 17 percent higher than a year earlier.

Average occupancies rose to 63 percent, 3 percentage points higher than in 2011, while revenue rose 11 percent to R492m. Total operating costs rose by 11.6 percent, but effective cost control and power-saving initiatives restricted the effect to a 6.5 percent rise in costs for every room sold.

City Lodge chief executive Clifford Ross said that although most of the guests were South African business travellers, the group was attracting foreign visitors, particularly at its airport hotels. It had lured more visitors from other African countries, particularly during the Africa Cup of Nations.

The group expanded outside South Africa for the first time two years ago with a joint venture in Kenya that consisted of a 50-50 stake in two hotels in Nairobi. Ross said this venture had made its first financial contribution, with an equity accounted profit of R7.3m after tax. Construction of the group’s 104-room Town Lodge in Gaborone, Botswana, was complete and would open for business at the end of this month.

The group would now investigate other opportunities in Kenya, Uganda, Rwanda and Tanzania. It was also in the process of acquiring a site in Pietermaritzburg for the development of a 90-room Road Lodge at a total cost of R40m.

Shares in City Lodge rose 2.2 percent to close trade at R116 on the JSE yesterday.