City Lodge reports major expansion programme on track

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Categories : Travel news

Despite weak trading conditions as a result of the slump in the domestic and global economies, the JSE-listed City Lodge Hotels group's turnover slipped just 1% to R339-million in the six months to 31 December 2009.

While occupancies across the group's four brands - Courtyard, City Lodge, Town Lodge and Road Lodge - fell to 70% from 81% a year earlier, they remained well above the South African hotel industry average.

Normalised headline earnings fell by 14% to R106.1-million and fully diluted normalised headline earnings per share also decreased by 14% to 246.1 cents.

Due to the lower profitability, as well as a reduction in the payout ratio from 70% to 60% of normalised headline earnings, an interim dividend of 150 cents was declared, 26% lower than in the previous corresponding period.

Meanwhile, the group said the biggest ever expansion programme in its near-25 history is on track to lift its number of hotels to 52 with 6 442 rooms by the end of 2010. The group currently has 44 hotels offering 4 989 rooms.

In the second half of the current financial year to 30 June, the group will fully open City Lodge Fourways (211 rooms), City Lodge at OR Tambo Airport (303 rooms), Road Lodge Bloemfontein Airport (66 rooms), Road Lodge Port Elizabeth (90 rooms) and Road Lodge Southgate (118 rooms). It will also partially open City Lodge Lynnwood (205 rooms), with half of the rooms expected to be available for the 2010 FIFA Soccer World Cup, and add 70 rooms to Town Lodge Grayston.

By the end of the 2010 calendar year, the group will fully open City Lodge Lynnwood, City Lodge Hatfield (187 rooms) and Town Lodge Port Elizabeth (203 rooms).

The group continues to research opportunities in other parts of the world, including in neighbouring countries and in emerging markets, such as India.

Commenting on the upcoming 2010 Fifa Soccer World Cup, City Lodge CEO, Clifford Ross, said the group is "fully primed and prepared" for the event, which will straddle the current financial year and the 2011 financial year.

Ross furthers: "Bookings for the duration of the tournament are looking promising, especially in the major host cities. In the smaller cities, there are still rooms available for normal business and leisure travel throughout the tournament."

"It is important to note that throughout the event in all parts of the country, there are opportunities for normal business travel to take place, keeping the wheels of commerce and industry turning."

Ross adds that while trading conditions remained tough in January and the first half of February, it was anticipated that demand for hotel accommodation could increase in the lead-up to the World Cup, enabling the group to achieve an improved performance in the second half of the financial year.

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