CITY LODGE POST IMPRESSIVE ANNUAL RESULTS AMIDST A CONTINUED DETERIORATION IN BUSINESS AND CONSUMER CONFIDENCE
In the week, City Lodge Hotels Limited released their reviewed group preliminary results for the year ended 30 June 2017. Overall, average occupancies decreased by 3 percentage points (from last year) to 63%. In South Africa, the drop in occupancy was similar and can be attributed to the continued deterioration in business and consumer confidence, negligible economic growth and decreasing disposal income for consumers and businesses that are cutting their costs in view of the prevailing economic conditions. Total revenue for the year grew by 1.8% to R1.52 billion. This was assisted by an inflationary increase in room rates. Normalised headline profit before tax decreased by 2.1% to R501.3m.
In terms of development activity, the 147-room Town Lodge in Windhoek, Namibia is making good progress and is expected to open next month. Construction of the 148-room City Lodge Hotel Maputo, Mozambique is underway and is expected to open in Q2 of 2018. Back home, plans are underway to extend the City Lodge Hotel at OR Tambo International Airport by 62 rooms, which will open in Q1 of next year. Plans are also at an advanced stage for the development of a 158-room Town Lodge in Umhlanga Ridge and a 90-room Road Lodge in Polokwane.
Looking ahead, City Lodge says that trading conditions have remained under pressure in the first six weeks of the new financial year. It is hoped that a catalyst will soon emerge to improve sentiment and provide fresh economic growth impetus that will stimulate both business and leisure travel. Will Tourism Month in September provide us with that catalyst?
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Has your business also felt a slight drop in occupancies or income that can be attributed to the downturn in economic activity and low confidence sentiment?
Find out the industry’s sentiment: Look out for The TBI Half Year Review and Outlook Report in next week’s edition of this newsletter!