Covid pushes City Lodge into loss
City Lodge Hotels posted a dismal set of interim results on Friday as occupancy rates fell amid prolonged lockdown measures and fears of a new wave of Covid-19 infections.
City Lodge Hotels posted a dismal set of interim results on Friday as occupancy rates fell amid prolonged lockdown measures and fears of a new wave of Covid-19 infections.
The company said the results for the six months to endDecember 2020 were brought about by the “devastating impact” of the coronavirus.
City Lodge recorded a net loss of R550.4m, compared to profit of R46.3m in the second half of 2019, and revenue plunged 73% from R809.3m in 2019 to R215.6m in the second half of 2020.
Normalised headline earnings decreased by 399% to a loss of R240.6m. Diluted and undiluted normalised headline earnings per share decreased by 129% to a loss of 54.2c. No dividend was declared.
“These challenges resulted in average occupancies of 17% for the group for the six months to December 31 2020, a 37 percentage point decline compared to 54% in the previous financial period,” the group said.
Operating costs decreased by 34%, mainly due to the costcontainment measures put in place from April 2020.
The group said, however, it has seen a steady improvement in occupancy since the last quarter of the 2020 financial year. As SA progressed to the lockdown level 1 risk-adjusted strategy by September and travel restrictions eased, occupancy gradually improved to 35% and 34% of total available rooms at open hotels in November and December, respectively.
City Lodge said it continues to review demand when assessing whether to reopen hotels and to date has 42 hotels open in SA and four open in the rest of Africa, accounting for 74% of the hotels in its portfolio.
During the year under review, City Lodge successfully raised proceeds of R1.2bn through a fully subscribed rights offer, which closed on August 21 2020. The group has also secured access to a R700m loan facility, of which R170m remained undrawn as at the end of December 2020. It further secured a waiver of the original debt covenants for the June 2021 measurement period.
City Lodge has completed the refurbishment of its Courtyard Hotel Rosebank and will open its 63rd hotel, the Courtyard Hotel Waterfall City, on March 1 2021.
All other pipeline developments have been put on hold due to the cash constraints resulting from the pandemic.
The second wave of infections and the return to lockdown level 3 hit occupancy rates, but their easing in February has already resulted in a steady improvement, City Lodge said.
While City Lodge anticipates a slow recovery of the hospitality sector, it said vaccination rollouts across the world and in SA are expected to lead to improved travel confidence and boost the recovery of the sector.