City Lodge says earnings to tumble more than 100%
The hotel group had all 55 of its hotels cease trading during the initial Covid-19 lockdown
Hotel chain City Lodge has become the latest company to flag a dramatic hit to its balance sheet as a result of the coronavirus, with full-year normalised headline earnings expected to tumble as much as 132%.
The hotel group, which had all 55 of its hotels cease trading, said on Friday that it would report a normalised headline earnings loss of between R70.1m and R86.1m to R267.1m for the year to end-June 2020.
The group said the pandemic has had a more adverse impact on its financials for the past three months.
The hospitality industry has been one of the hardest hit sectors by Covid-19 and the consequent government lockdown enforced to manage its spread.
The regulations set out for the hospitality industry forced hotels to initially close all hotels temporarily, with those that remained open being used as government quarantine zones. The sector was later permitted to operate but only for business and essential purposes as lockdown restrictions eased.
City Lodge, which also operates in countries such as Namibia, Tanzania and Botswana, was adversely affected by travel bans in those regions. All 62 group hotels were closed, which hampered revenue.
The group said revenue for the year would decrease 25% while interest expenses would rise 45% compared to R59.8m in 2019.
The group, which embarked on a rights issue in hopes of raising R1.2bn said it will release the results before issuing its rights offer circular planned for August 3. It will use the proceeds from its capital raise to pay down its debt and allow the company sufficient working capital to fund its cash shortfall, as well as portion it for future growth.
Shares in the company closed marginally higher at R18.37 on Friday.
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