The City Lodge Group says, in its annual results, that it has demonstrated agility and innovation in running a solutions-based operating environment in which its management team responded quickly and creatively to challenges, including its ability to suspend and reactivate hotels as demand determined.
This switch on-switch off technique is a new, previously undreamed-of business strategy for the hotel game that came with the pandemic. And City Lodge is not the first. When the government locked down to adjusted Level 4 in June, with an interprovincial travel ban, jaws dropped when local airlines LIFT and Comair temporarily shut down their flights and reopened them as the lockdown eased to Level 3.
The Group reported a nett loss of R894.4m (€53.3m) for the 2021 financial year, and a 56% drop in revenue, to R510m (€30.4m).
Headline earnings per share recovered a little to a 91 cent loss for the year to June 30, 2021, from the 123c per share loss in 2020.
Room occupancy numbers quoted in the financial report painted a vivid, if grim, picture of just how badly the hospitality industry in South Africa has been injured by the pandemic. City Lodge Group’s occupancy (all its 63 hotels) average was 19%, its occupancy over the open hotels in the group was 26% (down from 38% in 2020), and the average occupancy of all hotels in South Africa was 28%. By September 9, the Group had 51 out of 56 hotels open in South Africa and five out of seven open in the rest of Africa.
The Group’s occupancy took a big hit in July. “Total industry occupancies for July, a turbulent month of civil unrest and lockdown restrictions to travel, came in at only 16%, but this had improved to 24% in August.”
Big news for the group was the sale of its four hotels in East Africa, expected to be complete by the end of December. Proceeds from the disposal will be used to reduce debt levels, increase liquidity and support the working capital requirements of the Group.
The report emphasised the importance to the hotel industry of the government’s vaccination programme, saying although it had got off to a slow start, it was integral to the recovery of the hospitality industry.
The Group is positive in its forecast for occupancies looking ahead, saying this is largely due to the success of the vaccination programme becoming “the catalyst to growing confidence to travel by local and international travellers”.
The Group acknowledged the part played by the TBCSA and SA Tourism in trying to get South Africa removed from the red lists in the UK, EU and the US.