The City Lodge Hotel Group is making solid progress with its targeted African expansion strategy and expects to open five new hotels in Kenya, Tanzania, Uganda, Mozambique and Namibia by mid-2017.

Announcing its annual results for the year to June 30, 2015, the group also said it is on track to open two new hotels in South Africa – City Lodge Hotel Newtown and Road Lodge Pietermaritzburg – towards the end of this year.

The group currently has 52 hotels in South Africa, two in Kenya and one in Botswana, offering 6,834 rooms across the Courtyard Hotel, Fairview Hotel, City Lodge Hotel, Town Lodge and Road Lodge brands which cater for business and leisure travellers in the one to four star markets.

African expansion on track

In East Africa, construction on the 169-room City Lodge Hotel Two Rivers in Nairobi is due to commence in September with completion expected in the first quarter of 2017. Construction on the 147-room City Lodge Hotel Dar es Salaam is expected to begin during September, with completion also targeted for the first quarter of 2017. Formal agreements are due to be signed shortly relating to a 150-room City Lodge Hotel in Kampala, but these remain subject to the completion of a detailed feasibility study. It is anticipated that the study will be favourable and that construction will commence in the fourth quarter of 2015 or the first quarter of 2016.

In Southern Africa formal agreements have been signed for the lease of land in Maputo for the development of a 148-room City Lodge Hotel. Construction will begin on receipt of the final development approvals which is anticipated to be in the final quarter of 2015 or early 2016 for completion in the first quarter of 2017. In Windhoek, formal agreements have now been signed for the development of a 151-room Town Lodge. Construction is expected to commence in the first quarter of 2016 with completion scheduled for the first quarter of 2017.

Once the group has completed the development projects above, its total rooms will increase by 15% to 7,837 rooms.

Average South African occupancies increase to 67%

The group grew average occupancies at its mainstay South African operations by four percentage points to 67% in the year to June 30, despite headwinds from slow economic growth, weak business confidence and fallout from the Ebola crisis and changes to visa and travel documentation requirements.

Although the group’s Botswana hotel continued to improve occupancies, Kenyan operations were impacted by the Ebola pandemic in parts of the continent and ongoing travel advisories issued by governments in regard to security concerns in parts of East Africa.

Revenue grew by 22.6% to R1.3 billion

Total revenue for the year grew to R1.3 billion, assisted by a contribution from City Lodge Hotel Waterfall City, which was fully opened in February, and from the acquisition of HPF Properties Proprietary Limited’s 50% stake in the Courtyard Joint Venture with effect from 1 May for R77.5 million.

Normalised diluted Headline Earnings Per Share increased by 18.2% to 759.9cents

On a normalised basis, profit before tax for the group increased by 18.7% to R455.7 million, while normalised headline earnings increased by 17.9% to R332.1 million.

In line with the group’s established policy of paying out 60% of normalised earnings, a final dividend of 230 cents was declared, bringing the total dividend for the year to 460 cents per share, which is an increase of 17.7% on the previous year.

Apart from celebrating its 30th anniversary on 1 August, other operational highlights that have occurred include the roll-out of a fast and reliable fibre wireless internet offering for guests and the launch of Lodgix, an internal property management system, which will sharply improve the check-in and check-out experience for guests.         

Looking forward to the 2016 financial year, chief executive Clifford Ross said the trend of improving occupancies experienced in the year to 30 June has continued into July and August, auguring well for this momentum to be maintained in the months ahead.