City Lodge looks to recovery despite setbacks

City Lodge said it is navigating a tougher-than-expected trading environment as geopolitical headwinds and refurbishments across key properties put pressure on its performance for the year to end-June.

Occupancy slipped to 56% in the year to end-June from 58% in the year-earlier period, while 48,748 room nights — representing about 2% of the group’s total inventory — were taken out of service due to refurbishment work at eight hotels, the group said in a statement accompanying its annual financial statements.

“The partial recovery in occupancy following a 4% dip in the first half was supported by a 7% increase in average room rates for the year, this helped drive a 2% growth in rooms revenue, despite continued pressure on overall demand,” it added. 

Adjusted headline earnings per share (HEPS), which strip out one-off items, increased 9% to 34.6c.

The group declared a final dividend of 9c a share — unchanged from the previous year — bringing the total payout for the year to 15c.

The group lifted total revenue by 3% to R2bn, which was driven in part by steady growth in its food and beverage segment.

The hotel group said its food and beverage offering, now fully embedded across all brands, delivered an 8% increase in revenue to R393.2m. The division now contributes 20% of total revenue — up from 19% in the previous year — and there is potential for further upside, it added.

Group earnings before interest, tax, depreciation and mortisation (ebitda) rose 12% to R641.5m, while the margin improved to 32.1% from 29.8%. On an adjusted basis, the margin dipped slightly to 29.5% from 30.4%.

The group maintained a firm grip on overheads, with total operating costs increasing by 4% while profit for the year rose 13% to R213m.

Its shares gained 3.4% to 398c by the close on Friday, but are down just over 21% so far in 2025.

City Lodge refinanced its borrowings during the review period and retains access to R600m in debt facilities, with maturities stretching from three to five years. The group also has R115m in available overdraft facilities and reported it was at the end of its financial year.

“We’ve invested in eight hotel refurbishments, refreshed our website, returned R30m to shareholders through share buybacks, maintained steady dividends, and remain debt-free — well-positioned to pursue growth in key locations,” the group said.

City Lodge expects a stable government of national unity and interest rate cuts to result in an improved operating environment for the 2026 financial year.

“The 2026 financial year has started well, with occupancies up four percentage points in July and August, and food and beverage revenues rising by double digits. We’re optimistic these positive trends will continue,” the group said.

Update: September 14 2025

This story has been updated with the company’s share performance

majavun@businesslive.co.za