Hotel group overcomes low occupancies to post strong results

CITY Lodge Hotels Limited overcame a slight decrease in occupancy levels to achieve significant increases in turnover and earnings in the six months to December 31, 2001, according to the group's interim results posted yesterday. Turnover for the period rose 23% to R112.6m, while earnings per share increased 17% to 55.8 cents on a larger number of shares on issue. This following the conversion of 13.6 million debentures to ordinary shares in the half-year. While average occupancies slipped marginally to 72% from 74%, this was still considerably higher than the industry average. The fall was largely due to a reduction in overseas tourist arrivals. The increase in turnover was caused by an 8% increase in rooms sold due to the inclusion of Road Lodge Port Elizabeth, City Lodge GrandWest and Courtyard Port Elizabeth for the full six months as well as an improvement in achieved room rates. "Our operating cash flows were strong again, our gearing is down to 21%, and our balance sheet is very sound," said Hans Enderle, the group's executive chairman. "We are well poised to take advantage of trends and events that will be influencing the local hospitality industry in the medium term." Enderle was referring to the upcoming Australian cricket tour of South Africa this month, the World Summit on Sustainable Development in August, next year's Cricket World Cup and an expected influx of foreign tourists taking advantage of the rand's weakness against most major currencies. (Adéle Mackenzie)