OCCUPANCY RATE SHOOTS UP FOR CITY LODGE
City Lodge* results saw occupancies increase from 63% to 67%, a substantial jump, but what we didn’t see was the leverage effect f lowing through to prof its. An increase in occupancies should result in improved revenue (up 22.6%) and costs should not rise as fast due to the fixed nature of many of them. Yet HEPS was up only 18%. What hit the HEPS f igure was in part the new Waterfall City Hotel and buying out the remaining 50% of Courtyard Hotels. But the company still pays a very chunky dividend as it pays out 60% of normalised earnings in dividends, which increased by 17.7%. The big question is how much higher City Lodge can get its occupancy levels. I expect it to move to above 70% with 75% a tough but possible goal in the years ahead.