Finweek English Edition - - SIMON SAYS -

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.

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