City Lodge reopens its 56 SA hotels

JSE-listed City Lodge Hotel Group has reopened its 56 South African hotels and six of its seven hotels in the rest of Africa as occupancy rates slowly improve following the devastating impact of the Covid-19 pandemic.

The group has significantly reduced its net loss in the six months to the end of December 2021 and expects to complete the sale of its East African operations for R460 million before the end of April.

Read: City Lodge losses mount but CEO hopes worst of pandemic is over

The 127-room Fairview Hotel, 84-room Town Lodge Upper Hill and 171-room City Lodge Hotel at Two Rivers Mall in Nairobi, Kenya have been sold to Ukarimu Limited, which is owned by the world’s leading real estate investor and Actis Africa Immobilier sustainable infrastructure.

The 148-room City Lodge Hotel Dar es Salaam in Tanzania has been sold to Faraja Limited, also owned by Actis.

City Lodge CEO Andrew Widegger said on Friday that the transaction had received unconditional approval from the competition commissions in Kenya and Tanzania and that the proceeds from the disposals will be used to strengthen the group’s financial position and enable it to resume hotel renovation plans.


Widegger said South African year-to-date occupancies for February 2022 stood at 46% and the group expected monthly occupancy to improve and prices to recover over the next two business quarters.

He said the average occupancy rate for the six months to the end of December in the group’s South African operations, based on its total hotel room inventory, was 32%, with a low of 16%. in July 2021 and a maximum of 43% in November 2021.

An average occupancy of 30% was achieved for all hotels in the group during the six months to the end of December, compared to 17% for the corresponding period in 2020.

Statistics SA recently reported that the total revenue of the tourist accommodation industry, in nominal terms, increased by 46.6% in December 2021 compared to the same month in 2020.

He said accommodation revenue grew 18.4% year on year in December 2021, which he attributed to an 11.5% increase in the number of room nights sold and a 6.3 % of average revenue per night sold.

Widegger said the discovery of the omicron variant in South Africa at the end of November 2021 and the almost overnight closure of international travel routes to South Africa led to a decline in demand, which was significantly taken up by the internal leisure market.

In December 2021, the occupancy rate of open hotels in South Africa averaged 43% with 53 hotels open and five hotels open in the rest of Africa, he said.

“The fourth wave of Covid-19 infections and the temporary closure of international borders to flights departing from Southern Africa has had a limited impact on the group’s operations.

“However, the easing of Alert Level 1 restrictions since December 30, 2021 has had a positive impact on traveler confidence and late-night guest travel following the cancellation of curfews,” said he declared.

Hesitation to travel

Widegger said the new fiscal year had a particularly rocky start due to the severe third wave of Covid-19 infections and hospitalizations caused by the delta variant.

This has caused reluctance to travel, as have Tier 4 lockdown restrictions which banned leisure travel to and from Gauteng during the key winter school holiday period.

“Violent civil unrest in South Africa in July increased the negative impact on business operations during this period,” he added.

“Fortunately, the group suffered no property damage as a result of the protests in KwaZulu-Natal.

“However, the majority of hotels in the area have temporarily closed due to security concerns and lack of fuel and food, and resumed operations as soon as the situation stabilized.”


The steady improvement in occupancy and demand for hospitality services over the past few months has had a positive impact on City Lodge’s financial performance.

Total revenue for the period doubled to R436 million from R215.6 million for the previous period.

The group generated profit from operating activities before interest, tax, depreciation and amortization (Ebitda) of R122.6 million compared to the loss of R131.7 million in the prior period.

The group’s net loss after tax fell 94% to R33.7 million from R550.4 million.

Overall diluted and non-diluted loss per share improved 90% to a loss of 6 cents from the adjusted loss of 60 cents in the prior period.

The group generated positive cash flow from operating activities of R13.1 million, after offsetting the impact of increased working capital of R45.1 million resulting from the increase in commercial activity and the settlement of accrued liabilities associated with the development of the Courtyard Hotel Waterfall City, compared to negative operating cash flow of R68.9 million in the prior period.


No dividend has been declared.

At the end of December 2021, the group had a net cash and cash equivalent overdraft of R51 million compared to R35.3 million in December 2020.

Current liabilities exceeded its current assets, excluding assets held for sale, by R424.8 million compared to R9.4 million in the prior period.

The administrators of City Lodge believe that the group has sufficient liquidity to meet its obligations.

Widegger said the group has assessed and implemented various liquidity and capital measures to ensure it can weather the extended period of industry recovery due to Covid-19 and meet liquidity requirements. , working capital and expenses.

These include:

  • Obtain access to an additional R80 million of available term loan facilities and R48.4 million of short-term overdraft facilities;
  • Obtain waivers for initial debt covenants for all measurement periods through September 2022;
  • Implementing continued cost-cutting measures, including cutting wages and suspending contract workers until there is a steady recovery trend; and
  • Proceeds from the sale of its East Africa operations are expected by April 2022 and will be applied to the settlement of interest-bearing borrowings maturing within the next 12 months.

Shares of City Lodge rose 3.47% on Friday to close at R5.36.

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