SHARES in hotel group City Lodge rose around 7% after it yesterday issued an operational update showing better occupancies, room rates with a positive outlook post-Covid national lockdowns and increased travel.
“Despite demand being slightly dampened by ongoing loadshedding, high inflation and interest rates, and their impact on the economy and disposable income, the outlook continues to look positive as life returns to normal and businesses and individuals embrace the freedom to take every opportunity to travel,” it said.
It said the lifting of the National State of Disaster in April 2022 had further facilitated positive travel trends with businesses and individuals returning to travelling, meeting and experiencing life while nurturing relationships which had suffered during the prolonged period of lockdown.
Over the past few months, City Lodge said its occupancies had been bolstered by the return of international flights to almost pre-Covid levels, corporations returning to offices with an emphasis on building relationships and strategic planning.
In addition, domestic leisure travel continued to flourish, boosted by its enhanced food and beverage offering across all brands, which has resulted in an almost 200% increase in food and beverage revenue compared to the prior year.
Occupancies for the group for the financial year to date of 56.5% had realised steady month on month improvements, even exceeding 2019 levels in certain months, it said.
Monthly occupancies for the group had grown from 52% in July to 60% for November to date.
“The outlook for December 2022 occupancies looks positive and we forecast to exceed 2019 levels based on current demand and interest from our ‘Don’t skimp on your summer’ specials, advertising campaign,“ it said
City Lodge said the increased occupancies had resulted in better yielding with achieved room rates for the financial year to date up by 9.5% on the prior year comparative period and around the same as 2019 levels.
The group said it continued to generate positive cash flows, with a positive bank balance of R226 million as at November 27.
“The planned capital reinvestment in the portfolio is currently underway with the fit-out and availability of the remaining floors at Courtyard Hotel Waterfall City due for completion in early December 2022 and the refurbishment of City Lodge Hotel V&A Waterfront scheduled to commence in April 2023,“ it said
City Lodge’s current debt position was R300m, with access to a further R415m in debt and overdraft facilities.
The share was trading at R5.15 in intraday trade, having fallen 69.69% in the past three years as local and global Covid national lockdowns hurt the business.
Rod Lowe, a fund manager of AG Capital Value Flexible fund (@RodloweLowe) tweeted, “City Lodge - increased occupancies with better room rates for the FY to date - room rates up 9.5%. So occupancies up 100% from last year and room rates up 10%. Share price was R13 (pre covid rights adjusted) with worse stats. Share price rerating imminient ... Ewave target is R10.”
The Passive Income Guy (@hazelwood_dave) tweeted, “Nice trading update from City Lodge. Shares spikes to R5.25. When I suggested it as a long a while back, several people told me (proudly) that they were shorting the share. Ouch!”
BUSINESS REPORT