Nicola Mawson
17 August 2007
Johannesburg — AFFORDABLE hotel group City Lodge Hotels yesterday reported a record occupancy rate of 82% for the year to June, up from the previous year's figure of 79%.
The group grew revenue 15% to R509,7m from R442,1m in the year. Net profit grew 24% to R177,9m from R143,9m.
Financial director Andrew Widegger said the company had grown net profit, with a 35% margin, faster than revenue partly as a result of a high percentage of fixed costs, allowing higher occupancy rates to filter through to the bottom line.
City Lodge attributed the increase in occupancy rates to demand for quality rooms with value for money within the business and leisure sector, as well as new capacity being brought online.
Town Lodge George, a two-star hotel, contributed a full year, while the 106-room Town Lodge Roodepoort opened in January. Road Lodge Germiston, a one-star offering, was extended by 30 rooms in March, and there was a two-month contribution from 90-room Road Lodge East London, the company's 40th hotel.
However, occupancy rates in the second half of the year were marginally below the first half as a result of public holidays and the opening of two new hotels.
CEO Clifford Ross said the company was seeking to increase occupancy levels and had partnered with low-cost airline 1time to fill rooms over the weekend.
Ross said the introduction of low-cost airlines into the local economy had bolstered occupancy rates and the company was able to benefit from weekend travellers who could afford , for example, to follow a favourite sports team for the weekend.
However, low-cost flights meant consumers desired similarly priced accommodation and the company was rolling out brands best positioned to fit into certain cities.
Chairman Hans Enderle said the company could afford to expand into smaller cities such as Roodepoort as it had brands that would suit the size of the area.
Enderle said the firm aimed to increase rooms about 10% a year, which equated to about two or three new hotels each year. It expected to increase its 4700 rooms 15% to 5071 after spending R297m on new hotels, refurbishments and extensions.
A 27-room extension to Courtyard Port Elizabeth, a four-star hotel, was due to be completed in October, while a 60-room extension to City Lodge Johannesburg Airport, a three-star hotel, was expected to be completed in the first quarter of next year.
A 56-room extension to City Lodge GrandWest would also open early next year and Road Lodge Nelspruit would be extended by 30 rooms.
City Lodge Hotels said it had secured a site for a 90-room Road Lodge in Potchefstroom and construction of a 204-room Town Lodge in Port Elizabeth was anticipated to start in the first quarter of next year. Two new hotels, in Richards Bay and Centurion, were under construction.
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