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Hotels operator City Lodge has restored its dividend after a three-year hiatus, with a recovering tourism industry and new focus on food and beverages helping it almost double revenue in its half-year to end-December.
Group revenue rose by 94% to R848 million in the six months to end-December, the company said on Friday, reporting a profit after tax of R97.9 million from a loss of R33.8 million previously.
Occupancies improved to 57%, from 30% previously, with the company also benefiting from the proceeds of the sale of its East African operations in July - four hotels - of R467.2 million, with the group repaying half of a R600 million debt facility.
City Lodge, valued at R2.66 billion on the JSE, operated 59 hotels and over 7 000 rooms as the end of its 2022 year. On Friday, it declared a 5c per share interim dividend, representing about a R30.5 million payout. It last declared a dividend for the six months to end-December 2019, about R67 million, which was just before Covid-19 struck, with the pandemic then shuttering hotels and bringing travel to a halt.
In December 2022, StatsSA reported 677 838 foreign tourists, up 158% from 2021, though still below 2019's 981 038. The group, however, said the trend is promising.
"We are pleased to report sustained growth in average occupancies, with the second quarter’s occupancy rates well in excess of 2019 (pre-pandemic) levels," CEO Andrew Widegger said in a statement.
"Average room rates in SA for the six months have increased by 10% compared to 2021, but remain only 1% above 2019,” he said.
City Lodge also said its roll-out of the new food and beverage offering at Town Lodge and Road Lodge, as well as service and menu enhancements at City Lodge branded hotels has delivered a 132% increase in food and beverage revenue, which now comprises 16% of total revenue.
“Innovation from our food and beverage offering has greatly assisted us in attracting new markets such as domestic leisure travellers," said group operating officer Lindiwe Sangweni-Siddo.
"What was originally driven by guests wanting to avoid leaving their hotel for meals during the pandemic, has quickly become part of our standard offering."
City Lodge said on Friday that despite economic pressure on consumers, occupancy in January 2023 had climbed to 43%, from 31% in the prior year, while as of late February, it has improved to 59%.
City Lodge's shares were up 1.62% in afternoon trade on Friday, having lost about 70% since the start of 2022.
