- City Lodge Hotels sees rebound in tourism demand.
- Improved financial position enables capital reinvestment.
- Expected more than 100% improvement in earnings per share.
City Lodge Hotels Limited, a leading South African hotel group, has released a voluntary operational update and initial trading statement for the year ending 30 June 2023. The update reveals that travel trends continue to rebound, with demand patterns normalising to pre-Covid-19 pandemic levels. The hospitality sector has seen a continued recovery, with the return of international guests and a strong showing from domestic guests.
Despite a soft performance in January 2023, monthly occupancies have steadily improved and exceeded 2019 levels, with both group and South African hotels achieving 63% occupancies in March 2023. May 2023 saw a group occupancy of 56%, exceeding 2019 levels by just over 4%. The Group's average occupancies for the eleven months to May 2023 was 56%, 18% higher than the prior period.
The average room rate has also rebounded, with high single digit percentage increases against the equivalent 2019 rates. The May year to date average room rate for 2023 is 12% higher than the prior corresponding period. However, the company is mindful of the cumulative inflationary increases in expenses over the past three years since the onset of the Covid-19 pandemic.
City Lodge Hotels Limited's strategy to expand its food and beverage offering has also delivered positive returns, contributing roughly 17% of the Group's total revenue. The company has also been able to reinstate its refurbishment and maintenance programme, thanks to the improved financial well-being of the organisation. In April 2023, the Group completed the refurbishment of Road Lodge Richard's Bay and commenced the major refurbishment of City Lodge Hotel V&A Waterfront, which is expected to complete in October 2023.
The improved overall performance and strong cash generation from operations have resulted in a near neutral net debt position for the company. As of the beginning of June 2023, City Lodge Hotels Limited had a cash balance of R297 million and borrowings of R300 million. The Group continues to have access to a further R300 million in unused debt facilities and R115 million in overdraft facilities.
In terms of the Listings Requirements of the JSE Limited, City Lodge Hotels Limited has also released an initial trading statement. The statement reveals that the company's headline earnings per share and earnings per share for the year ending 30 June 2023 are expected to show a more than 100% improvement compared to the previous corresponding reporting period.
While the financial information on which this trading statement is based has not been reviewed or reported on by the Group's external auditors, shareholders can be optimistic about the future of City Lodge Hotels Limited given the positive operational update and trading statement. With a rebound in tourism and a strong financial position, the company looks set to continue delivering value to shareholders while also providing a welcoming and comfortable experience for guests.
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