City Lodge ushers in African expansion

City Lodge

Sales improve 9% in the six months to December 31 compared to the year before, plans now in the pipeline to invest R1,5bn in hotels across Africa.

Listed hotel group City Lodge is making its first move outside SA by building a 106-room Town Lodge in Gaborone as part of its plans to expand its business outside the country and cash in on Africa’s growing middle class.

"We have broken ground and plan to have a soft launch in December. The total outlay for the new hotel has been R61m," CEO Clifford Ross said yesterday.

City Lodge "will be disappointed" if it did not announce at least one other new hotel on the continent, Mr Ross said.

"Town Lodge is our two-star brand and we believe it was the right brand to take into that market because a lot of the hotels playing in that market are in the three-and four-star category. We can offer something different."

The group has 52 hotels offering 6440 rooms across its four brands, Courtyard, City Lodge Town Lodge and Road Lodge, which rank respectively from four-star to one-star.

City Lodge reported a bounce back from the "doom and gloom" that has dogged the hospitality sector following the global economic crisis and the slump after the 2010 Soccer World Cup, which saw tourism dry up at the same time the market had a large increase in room inventory.

Sales improved 9% to R443m in the six months to December 31 compared to the same period a year earlier. Margins improved slightly and the group was able to contain operating costs to a 5,6% increase in the six-month period in the face of double-digit increases for utilities.

City Lodge plans to invest as much as R1,5bn over the next five to 10 years building up to 20 hotels in Africa.