City Lodge says SA’s hospitality recovery is still constrained by limited airline capacity and rising ticket prices, warning that the shortage of available seats since the collapse of several local carriers continues to choke demand for travel.
The hotel group, which reported a two percentage point drop in group occupancy to 56% in the year to end-June, said the lack of affordable and accessible flights has prevented a fuller rebound in business and leisure travel, even as the broader economy shows signs of stabilising.
CEO Andrew Widegger said airline seat availability is still below pre-Covid levels and ticket prices remain high, making it harder for consumers to travel.
The grounding of Mango and Comair, which operated Kulula.com and British Airways locally, left a gap that has yet to be fully filled, he said. The airline bottleneck adds to an already turbulent domestic climate.
Widegger called the past year “stop-start”, with early optimism over the government of national unity (GNU) fading into a “wait-and-see” approach due to budget delays and global geopolitical and tariff concerns.
“We started the financial year in July… the formation of the GNU had just happened and there was a bit of euphoria, but it didn’t translate into business confidence. I think businesses sat back and said, ‘you know, really at the end of the day, what does this mean?’”
Despite these headwinds, City Lodge delivered profit growth of 13%, aided by a 7% lift in average room rates and a growing contribution from food and beverage sales.
Widegger said food and beverage revenue climbed 8%, accounting for 20% of total turnover — up from between 10% and 12% before the pandemic — after the group rolled out lunch and dinner offerings across its brands.
Capital investment was another focus. The group refurbished eight hotels during the year, including major upgrades at its V&A Waterfront property, which was regraded to four-star status. These upgrades helped lift room rates, though the group acknowledged that refurbishments temporarily took nearly 49,000 room nights out of inventory.
Rising costs also remain a challenge, with salaries and utilities among the biggest pressures. Wages, which account for about 40% of operating costs, were increased above inflation to offset pandemic-era pay cuts, while electricity and water inflation continued to bite, the group told Business Day.
City Lodge said its solar rollout, which covers 41 hotels, and its water-resilience projects are designed to limit exposure to utility hikes and outages.
Widegger said the group remained cautiously optimistic. Occupancy for July, August and early September had improved by four percentage points year on year, and the group is hopeful that November’s G20 summit in Johannesburg will boost international visibility and demand.
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