- While it’s not back to its pre-pandemic position, the City Lodge Hotel Group has doubled its revenue over the past year.
- Average group occupancies increased from 19% last year to 38% in the past year.
- The leisure market now comprises a much larger proportion of the group's total number of guests.
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While it’s not back to its pre-pandemic position, the City Lodge Hotel Group has doubled its revenue over the past year.
The group's results for the financial year until the end of June 2022, released on Wednesday, show revenue more than doubled from R0.51 billion in the 2021 financial year to R1.10 billion in 2022 - still about a quarter below its pre-pandemic performance in 2019.
The group reported a profit after tax of R81.7 million compared to a net loss of R804.6 million in 2021. Its profit after tax is still 60% below 2019 levels.
It suffered a headline loss per share of 9c over the past year, an improvement on a loss per share of 91c in the previous financial year. As in 2021, the group has again not declared a dividend.
Average group occupancies increased from 19% last year to 38% in the past year. Occupancies for SA hotels averaged 40% compared to 21% in 2021. SA hotels recorded occupancies of 53% in July 2022, 52% in August 2022, and 56% up to 18 September 2022.
"While the Covid-19 pandemic still lingers, the burden on the hospitality, travel and tourism sector lightened significantly during the year under review," CEO Andrew Widegger said in a statement.
"Occupancy rates heading north of 50% excites me, especially if they can reach pre-Covid-19 occupancy levels on the lower cost base," says Muneer Ahmed, equity analyst at Denker Capital. He says it’s clear that the second half was much stronger than the first due to a lifting of lockdown restrictions.
"The big cash payment received from the sale of the East Africa hotels came after year-end," says Ahmed. "It pretty much sorted out the balance sheet and should make for a decent profit next year."
Widegger credits strategic innovations implemented during the challenging two-year Covid-19 period, and a lifting of lockdown restrictions since, for the group's improved performance.
For example, travellers now prefer hotels with complete accommodation and meal offerings under one roof. That is why Town Lodges and Road Lodges now offer lunch and dinner options, in addition to a "value" breakfast. The group saw a 150% increase in food and beverage revenue thanks to the enhanced food offering.
Furthermore, a new dynamic pricing model helped to increase competitiveness by offering the best available rates. Weekend specials aimed at the leisure market resulted in improved occupancies over weekends. The leisure market now comprises a much larger proportion of the group's total number of guests.
During the 2022 financial year, the group completed the sale of its four hotels in East Africa. This brings the group's portfolio to 59 hotels in four southern African countries.
"There are still many challenges ahead, from the state of our economy, to load shedding, petrol price increases, global inflation trends supply constraints, and geo-political tensions," says Widegger. "However, we feel confident that [we have established] ourselves as a sustainable, agile and innovative hospitality group. Occupancies and room rates continue to edge toward achieving 2019 pre-Covid-19 levels."
The capital investment programme over the next 12 months includes the completion of the fit-out of the remaining four floors at Courtyard Hotel Waterfall City, and refurbishments at the City Lodge Hotel V&A Waterfront and Road Lodge Richards Bay.
City Lodge’s share price fell more than 2% on Wednesday to R3.77, and is now down 33% since the start of the year.