Hotel chain City Lodge says it is facing the threat of becoming irrelevant as competitors intensify their digital and service offerings.
The group has admitted that it underinvested in product innovation, digital and marketing solutions, which have weakened its market position.
The group also raised concerns about its brand value, further conceding that “aggressive discounting” competitors and the presence of burgeoning alternatives such as Airbnb are a threat to its market relevance.
“Insufficient investment in product innovation and maintenance and ineffective marketing and digital strategies could diminish market attractiveness. Decreasing consumer income, new, digitally driven competitors and inadequate service levels further threaten our brand and competitive position,” the group said in its 2024 Integrated report.
To counter these competitive risks, City Lodge said it had launched a strategic plan focused on growth and resilience, including an “integrated marketing and digital strategy” that uses social media, third-party experts, OTA platforms and partnerships to boost consumer loyalty and reach.
The group said it was enhancing its product offerings with expanded food and beverage options, with the aim to improve customer satisfaction and distinguish its brand.
City Lodge said it had also employed an AI-driven yield system to optimise pricing and revenue, while investments in IT infrastructure, such as cloud integration and system upgrades, fortified its commitment to operational efficiency and digital adaptability.
Yet, challenges to competitiveness remain. The group said its legacy systems and limited resources were slowing down the adoption of new technologies, putting it at a disadvantage compared to more agile players.
“A weak digital presence might limit market reach and brand recognition. These challenges threaten competitiveness and require agile management to sustain and create value,” it said.
Cybersecurity has also emerged as a crucial area of concern with the group saying that rising “sophistication in cyber threats, combined with vulnerabilities from third-party network access and potential lapses in IT governance”, could expose the group to security risks.
Compounding these challenges are economic uncertainties including unemployment and declining consumer confidence that have affected demand for leisure and business travel, especially in KwaZulu-Natal.
Despite those headwinds, City Lodge recently reported a 13% increase in group revenue and improved occupancy rates of 58% over the past year.
“As we look ahead to the 2025 financial year, the group is cautiously optimistic about economic recovery and the broader macroeconomic environment. While inflationary pressures and load-shedding remain challenges, we anticipate these headwinds will begin to ease in the latter part of the year,” the group said.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.