- Occupancies dropped to an average of 38%
- Posted a net loss of R486,6 million from a profit of R205,5 million in 2019
- Revenue dropped by 25% to R1,16 billion
Harare – South Africa based hotel operator City Lodge Hotels Limited experienced a significant adverse impact from the restricted operational and economic environment arising from the COVID-19 pandemic.
According to the group’s annual report, average occupancies for 12 months period significantly dropped from 55% in the previous year to 38% while in South Africa, occupancies decreased from 58% in the previous financial year to 41%, which is a further 16 percentage point decline from the occupancy for the six months to 31 December 2019.
City Lodge said the operating environment in South Africa was impacted by persistent negative growth, and low business and consumer confidence which contributed to the Moody’s rating agency downgrade of South Africa to ‘Junk’ status in late March and to the marginally lower occupancy levels in the first three quarters of the financial year.
During the period under review, the group incurred a net loss of R486, 6 million from a profit of R205, 5 million in 2019 and a 25% reduction in total revenues to R1, 16 billion.
The loss was primarily due to exceptional losses of R344, 6 million net of tax, related to the impairment of property, plant and equipment along with right-of-use assets of some hotels.
“The impairment of deferred tax assets of R47, 1 million together with the recognition of IFRS 16 Leases interest expense, and depreciation net of previously recognised lease expenses of R67, 4 million, net of tax, contributed to the loss,” said the group.
City Lodge said the impairments are due to management’s assessment of the negative impact of COVID-19 on forecast cash flows generated by the underlying hotels and increased risk assessments that had a material impact on discount rates applied across the portfolio.
Meanwhile, operating costs excluding depreciation decreased by 24% due to the operating cost reductions to the cost containment measures put in place from April, to mitigate the extent of the losses arising from minimal revenues.
On the outlook the group said, “The next year will remain challenging as we continue to bear the impact of the prolonged lockdown measures across the South African and remaining African economies.
“The group’s hotels remain ready and flexible to open at short notice based on guest demand, while ensuring strict adherence to our industry leading hygiene and safety protocols to ensure the safety and well-being of our guests and staff.”
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