City Lodge posts single-digit profit growth as occupancies drop
Hotel group says trading in the first six weeks of 2017 has been ‘mixed’
City Lodge Hotels has reported low single-digit growth in first-half profit as occupancies in its home market declined.
Normalised headline earnings inched up 2% to R197.12m as the occupancy rate dipped to 66% in the six months to December from 69% a year ago, the company said on Thursday.
The drop in occupancies was mainly due to low business and consumer confidence in SA where the group has 54 hotels. Occupancies in Botswana were on a par with the previous year and Kenyan operations achieved slightly higher occupancies.
Group revenue rose 5% to R791.3m, benefiting from an inflationary increase in room rates and first-time contributions from the 90-room Road Lodge Pietermaritzburg and the 148-room City Lodge Hotel Newtown.
CE Clifford Ross said trading in the first six weeks of 2017 had been "mixed", making it difficult to ascertain an outlook for the second half of the financial year. "Stronger economic growth and improved business and consumer confidence would be catalysts for a stronger performance by the group," said Ross.
The share price was down 1.74% to R150 in midmorning on the JSE, valuing the company at R6.6bn.