City Lodge Hotels Limited announced its interim financial results for the six months ending 31 December 2023, showcasing a strong recovery from pandemic-induced challenges.
Financial Highlights
The company reported a remarkable 18% increase in revenue, totaling R1.0 billion compared to R0.8 billion in the same period last year. Key financial metrics demonstrated substantial growth:
- Group occupancy surged to 61%, up 4 percentage points from 57% in 2022.
- Earnings per share (EPS) rose to 18.8c, marking a 10% increase from 17.1c in the previous year.
- EPS excluding business interruption receipts and unrealised foreign exchange losses/gains soared to 20.0c, up by an impressive 66% from 12.0c in 2022.
- Headline earnings per share also increased by 10% to 18.8c.
- Dividends declared per share saw a significant uptick, rising by 20% to 6c from 5c in 2022.
Commentary on Recovery
City Lodge Hotels attributed its strong performance to a six-month period free from pandemic-related restrictions, starting from June 22, 2022. The recovery in trading remained robust, with a notable 4 percentage points growth in occupancies, reaching 61% compared to 57% in the prior period. This increase represents a significant improvement, surpassing the pre-pandemic levels by six percentage points.
Revenue Growth and Operational Strategies
The company’s revenue growth was fueled by strategic initiatives such as the introduction of best available rates (BAR) and enhancements in food and beverage offerings. Accommodation revenue saw a substantial 16% increase to R806.7 million, while food and beverage revenue surged by an impressive 36% to R188.5 million. The improved revenue stream underscores the success of City Lodge Hotels’ business strategies in capturing market demand and enhancing customer experience.
Financial Review
Despite facing challenges posed by the South African economy, including low GDP growth, high inflation, and ongoing loadshedding, City Lodge Hotels maintained a strong financial position. The company reported a net cash position of R54.6 million, a significant turnaround from the net debt of R52.1 million in the previous year. Additionally, all outstanding borrowings were settled, further strengthening the balance sheet.
Outlook and Future Plans
Looking ahead, City Lodge Hotels remains cautiously optimistic despite uncertainties surrounding the upcoming South African government elections. January and February 2024 showed promising signs of recovery, with continued growth in average room rates and food and beverage revenues. The company plans to continue investing in strategic capital projects to enhance its portfolio of hotels and deliver exceptional service to guests.
Declaration of Dividend
In line with its commitment to returning value to shareholders, the board declared an interim cash dividend of 6.00 cents per share, reflecting confidence in the company’s financial performance and future prospects.
Important Dates and Additional Information
Shareholders are advised of the following important dates related to the dividend declaration:
- Last date to trade cum dividend: Tuesday, 12 March 2024
- Shares commence trading ex dividend: Wednesday, 13 March 2024
- Record date: Friday, 15 March 2024
- Payment of dividend: Monday, 18 March 2024
