SOUTH AFRICA — City Lodge Hotels has reported higher annual earnings due to increased occupancy, improved room rates, and an enhanced food and beverage offering.
The group, which reported a 10% increase in adjusted headline earnings per share to 31.8 cents, reported that room occupancies and revenue had continued to grow in the year to June 30, as it recovered from the legacy of the Covid pandemic.
“The group is well-positioned, with no outstanding debt, revenue up 13%, and group occupancies of 58%, two percentage points (pp) ahead of 2023. Food and beverage (F&B) revenue has grown 22% in the year,” said Nathoo.
CEO Andrew Widegger said the 2025 year had begun with a cautious improvement in economic sentiment compared to the last few months of the previous financial year as the new government established itself.
This sentiment had, however, not yet translated into occupancy trends, with softer occupancy for July 2024 of 56% (July 2023 – 61%), August 2024 of 55% (61%) and month to September 5 2024 of 61% (60%), he said in a statement.
“The financial year kicked off with fervour and optimism with strong demand for occupancy in the first quarter, which was about eight percentage points ahead of the prior year,” she said.
However, the strain of high inflation and interest rates, the cumulative effects of load shedding, and poor investor and consumer confidence caused by political uncertainty in the run-up to the elections eroded corporate demand and consumer purchasing power.
Government austerity measures implemented in October also contributed to subdued demand. These factors led to a one-percentage-point cut in occupancy between November 2023 and June 2024 compared to the prior year.
Regionally, the Western Cape saw the fastest recovery in occupancy and rates. The greater Johannesburg area also experienced a slight recovery as more business travellers worked from their offices and their travel needs increased.
In contrast, leisure demand in KwaZulu Natal suffered in the year due to socio-economic challenges, including sporadic beach closures, the departure of many Durban beachfront businesses, and safety and security concerns.
Over the past year the upskilling and right-sizing of the F&B and staff complement resulted in a 12% increase in salaries and wages. The group mitigated increased property costs by using more solar power generated by the 16 hotels that had installed solar panels in the year.
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