City Lodge Hotels Group - Financial results for financial year ending 30 June 2019

The JSE-listed City Lodge Hotel Group has almost completed its initial targeted expansion into East and Southern Africa and has this week opened the 154-room Town Lodge Umhlanga, its 55th hotel in South Africa.

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 7,902 rooms in South Africa, Namibia, Botswana, Kenya, Tanzania and Mozambique.

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

Releasing its results for the financial year to 30 June, the group said average occupancies across its hotels fell from 59% to 55%, impacted by challenging trading conditions in its markets. South African average occupancies fell from 61% to 58% as a result of low levels of business and consumer confidence, high unemployment, uncertainty around Eskom’s sustainability and land expropriation, as well as negative economic growth in the first quarter of 2019.

Total revenue rose by 3% to R1.5 billion. On a normalised basis, total operating costs increased by 11.4%, but by a lower 7.2% in South Africa where most of the group’s hotels are situated.

Normalised headline earnings decreased by 19.3% to R267.1 million and diluted normalised headline earnings per share decreased by 19.4% to 613.4 cents.

A gross final dividend of 137 cents has been declared, bringing the total dividend for the year to 366 cents, 19.4% lower than in the previous year.

Commenting on the outlook for the 2019-20 financial year, CEO Andrew Widegger said the weaker trend of the past year has extended into the new financial year, adding that new catalysts are needed to boost investment confidence and economic growth.

“Our portfolio of hotels in South Africa, Southern Africa and East Africa is in excellent shape after ongoing refurbishments and the addition of exciting 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.