Julius Baumann

Aviation and Tourism Editor

STRONG demand across City Lodge Hotels’ four brands helped the group maintain average annual occupancy at 82% in the year to June, boosting revenue 18% to R599,9m.

Net profit and diluted headline earnings per share both rose 27% to R225,6m and 524,9c respectively while the operating profit margin rose two percentage points to 52% and operating profit rose 23% to R312,2m.

Occupancy in the second half was marginally lower as a result of the additional capacity created by the new 118-room Road Lodge Centurion and 90-room Road Lodge Richards Bay, as well as the additional 59 rooms at City Lodge Johannesburg Airport, 56 rooms at City Lodge GrandWest and 27 rooms at Road Lodge Nelspruit.

Hans Enderle, City Lodge’s chairman and founder, said positive trading conditions continued into the first six weeks of the new year despite the challenging economic environment and earning were likely to be boosted by the full-year contributions of the additional capacity created in 2007-08.

“While we have seen a slight drop in weekend and leisure travel, the business market, which is our bread and butter, remains strong.” He said the surge in capacity by rival hotels groups, particularly in key nodes such as Sandton, was unlikely to affect City Lodge, which operated in the mid-market.

“We have a specialised product and we still offer great value,” said Enderle.

That the group’s hotels were geographically spread across SA also alleviated pressure in overtraded centres such as Sandton.

The group will continue to expand in the new financial year, with construction well under way on the 90-room Road Lodge Potchefstroom, which is due to open in November. Work on the 204-room Town Lodge Port Elizabeth is expected to begin shortly with completion set for 2010. Also on the drawing board are plans for a 200-room City Lodge in Fourways, a 200 room City Lodge in Lynnwood and a 150-room City Lodge in Hatfield, both in Pretoria.

“The fact that City Lodge’s occupancy levels are above 80%, when the global industry average is 60% is testament that people want us to build more hotels. We also have four brands, with different price points, which allows us to build them next to each other, as we have done at OR Tambo International Airport,” said Enderle.

The group has 42 hotels with 4773 rooms across its four brands, Courtyard, City Lodge, Town Lodge and Road Lodge, and Enderle expects the portfolio will rise to 49 hotels with 5855 rooms by the start of the 2010 Soccer World Cup.

The only wrinkle in City Lodge’s results was income from its Courtyard joint venture with the Hospitality Property Group being affected by a R900000 cost relating to a computer system crashing at one of it hotels. Nevertheless, the share of profit from the joint venture rose 12% to R8,5m.

On the positive results, the hotel group declared a final dividend of 194c, 27% higher than in the previous full-year period.

Source: Business Day