‘Hotels to be early beneficiary of #Zexit’
Likely to stimulate economy
SOUTH Africa’s hotel industry would be one of the early beneficiaries of the higher levels of confidence and “euphoria” created by President Jacob Zuma’s resignation, according to JSElisted City Lodge Hotels group.
Clifford Ross, the chief executive of the group, said yesterday that President Zuma’s resignation would stimulate the economy, business and consumer confidence “and certainly filter through to our results going forward”.
Andrew Widegger, the financial director of the group, added that there were signs the economy was getting back on to a more meaningful growth path, but before increased growth was evident in the economy, business needed to invest or travel to first investigate potential opportunities.
“Hopefully, they will end up staying in our hotels,” he said.
Average occupancies in the group in the six months to December declined to 63 percent from 66 percent in the prior period, with occupancies in South Africa dropping 2 percentage points to 64 percent.
Ross said the group’s historical average occupancy level was about 72 percent and it would like it trending closer to that level over the next few years. Widegger said the group’s peak occupancy level of 83 percent was achieved in 2007/08 before the global financial crisis.
City Lodge embarked on an expansion into Africa in 2015. It has already resulted in the opening of a Town Lodge in Windhoek last year, with City Lodge hotels expected to be fully operational in Nairobi in Kenya in April, in Dar es Salaam in Tanzania by the middle of this year and in Maputo in Mozambique by July.
Widegger said the group had invested about R700 million in these hotels.
Ross stressed that the group had “not taken its foot off the pedal” in regard to the development of further hotels in Africa, although they did not have anything now that they were close to announcing.
But Ross confirmed that the development of hotels in Kampala in Uganda, Port Louis in Mauritius and Zambia was “still on our radar.”
The group also believed that there was an opportunity to build more of its brands, such as a Road Lodge and Town Lodge in Kenya and a hotel in Arusha in Tanzania.
City Lodge is also making progress with its hotel development programme in South Africa. It is extending its City Lodge at OR Tambo to 365 rooms, earthworks had begun for a 158-room Town Lodge in Umhlanga Ridge and planning was at an advanced stage for the development of a 90-room Road Lodge in Polokwane.
Widegger said the City Lodge at OR Tambo was on a leasehold from the Airports Company of South Africa, but City Lodge would be investing R15m in furniture, fittings and equipment while R140m would be invested in the Town Lodge in Umhlanga Ridge and R55m in the Road Lodge in Polokwane, both of which were expected to open next year.
Yesterday, City Lodge reported an 11.6 percent decrease in normalised headline earnings to R174.3m in the six months to December, with earnings impacted by an unrealised foreign exchange loss of R13.4m caused by the rand’s sharp strengthening in December.
Fully diluted normalised headline earnings a share decreased by 11.8 percent to 400.6c. Total group revenue decreased by 0.5 percent to R787.1m.
An interim dividend a share of of 253 cents was declared, which was 7 percent lower than a year earlier.
Shares in City Lodge rose 1.27 percent on the JSE yesterday to close at R159.