City Lodge Hotels has reported higher annual earnings thanks to increased occupancies, improved room rates, and an enhanced food and beverage offering.
The group’s revenue climbed 13% to R1.9bn for the year ended June and it achieved an average group occupancy rate of 58%, a two percentage point increase from the previous year, it said in a statement.
City Lodge recorded an impressive 22% increase in food and beverage revenue, which now accounts for 19% of the group’s total revenue, compared with 17% last year.
Headline earnings per share (HEPS) grew 10% to 33.2c. Adjusted HEPS, which excludes unrealised foreign currency losses and exceptional items, surged 37% to 31.8c
The company declared a final dividend of 9c per share, making a total dividend of 15c per share for the year, up from 13c a year ago.
City Lodge noted that while the financial year began with strong occupancy demand, the combination of high inflation, rising interest rates, load-shedding and political uncertainty took a toll on both corporate demand and consumer spending. These factors caused a slight reduction in occupancy in the latter half of the year, compared with the previous year.
However, despite these challenges, the company’s focus on efficiency and service quality helped it achieve a 29.8% earnings before interest, taxes, depreciation, amortisation and restructuring or rent costs margin, reflecting its ability to maintain profitability even under difficult conditions.
City Lodge said it continued to invest heavily in sustainability initiatives, including installing solar panels at an additional 16 hotels, bringing the total to 41 hotels equipped with solar energy. The group also enhanced its water resilience strategy by installing boreholes and filtration systems at several locations.
The group said it was optimistic about the future, welcoming the formation of a government of national unity and expecting possible interest rate cuts later in the year.
It has set aside R459.4m in capital commitments for the 2025 financial year to continue its modernisation programme and pursue technology investments aimed at improving guest experiences.
While the group saw softer occupancy in July and August compared with the same period last year, it remains confident that as business and consumer confidence returns demand will recover, supporting its growth ambitions.
With no outstanding debt and significant cash reserves, City Lodge is well positioned to weather future economic uncertainties while exploring new opportunities for expansion in high-growth areas across SA.
“The group is actively pursuing selected opportunities for new hotels in high growth areas within SA,” it said.
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