City Lodge Hotels, which has branched into Namibia has reportedly doubled its annual profit after the Covid-19 pandemic and now plans to invest back into the group by recommencing its refurbishment programmes.
City Lodge Hotels chief Andrew Widegger said: “We are now seeing our recovery playing out. We expect this growth trajectory to continue as we roll-out several significant developments aimed at boosting the bottom line by enhancing the guest experience.”
Group occupancies were up 18 percentage points to 56% from the prior year’s 38%.
“Occupancies have been on a rising trend, with monthly occupancies since October 2022 exceeding those of 2019 (excluding January 2023). Similarly, average room rates for the year have increased meaningfully by 12% compared to last year, and we have been recovering lost ground against pre-Covid room rates,” it said.
For the year to 30 June 2023 its profit for the year checked in at N$164 million from N$82 million, with its revenue rising 55% to N$1,7 billion.
The board declared a final cash dividend of 8 cents per share after management withheld a dividend the prior year.
Integrity Asset Management assistant portfolio manager Martin Rodgers said: “Staggering numbers from City Lodge for their full year results, recovering nicely!”
City Lodge managed to halve its debt.
Debt funding was N$300 million as at 30 June 2023, from N$600 million, while cash balances were N$328,3 million, from an overdraft of N$59,3 million the prior year.
Food and beverage revenue rose due to new menus at City Lodge Hotels and Courtyard Hotels, as well as the expanded lunch and dinner options at the Town Lodge and Road Lodge brands.
It now accounted for 17% (2022: 15%) of total revenue – a 79% increase on the prior year.
However, costs rose. Salaries and wages increased by 32% to N$492,7 million, as the prior year included a period of up to 30% salary reductions for reduced time worked during Covid-19 as many hotels remained closed or had low occupancies.
Property costs increased by 19% due to the increase in utility prices and the increase in the variable portion of these costs from greater occupancy volumes.
“The cost of running the generators during more frequent power outages increased to N$16,6 million, from N$3,2 million in the prior period,” City Lodge said.
Looking ahead, the board said it remained cautious about the economic challenges, particularly in South Africa, with the ongoing electricity and water supply constraints and the high inflation and interest rates over the past 12 months.
Widegger said: “As a consequence of our now robust financial position, our refurbishment programmes have recommenced to ensure our products are always in tip-top condition.”
Dhanisha Nathoo, the chief financial officer, said: “The 2024 financial year will be the year of renewed fervour into modernising and reinvesting in our portfolio of hotels, with refurbishments scheduled at 10 hotels, which will include the further roll-out of our new generation hotel room designs to make the products more appealing to our changing guest profile and delivering an enhanced return for our shareholders.”
City Lodge’s solar programme was being expanded from 25 hotels to a further 15 hotels. Total capital commitments authorised for the 2024 financial year were N$367,6 million. – IOL News
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