Tourism player

Finweek English Edition - - INVESTMENT - SI­MON BROWN

THE CITY LODGE share price has been storm­ing ahead adding some 45% in the last year and a num­ber of fac­tors in­di­cate that more up­side is likely. First, tourism num­bers for South Africa, which came out last month, show great num­bers com­ing to South Africa, and while the ma­jor­ity are from neigh­bour­ing coun­tries rather than the richer Euro­pean and North Amer­i­can coun­tries, th­ese tourists fit right into the City Lodge pro­file of lower- to mid­dle-in­come tourists.

Fur­ther, we see from the Tsogo Sun re­sults that oc­cu­pancy lev­els in the lo­cal ho­tel sec­tor are ris­ing, and this will bode well for City Lodge as the largely fixed cost of a ho­tel means that most of the in­crease in oc­cu­pan­cies goes straight to the bot­tom line. The pre-World Cup ex­pan­sion by the ho­tel in­dus­try has mostly been ab­sorbed (al­beit not so much at the top end), which will start to give ho­tels some pric­ing power, adding not only ex­tra oc­cu­pancy lev­els but at bet­ter rate per night.

*The writer holds shares in City Lodge.

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