Leading South African mid-market hotel group City Lodge has reported strong occupancy rates and notable increases in revenue in its 2024 integrated annual report.
In a Q&A session, City Lodge Hotel Group CEO Andrew Widegger unpacked the group’s performance, investment initiatives, strategic highlights, operational challenges and future business prospects.
Q: What stands out when reflecting on the 2024 financial year?
A: What truly stood out this year was how our deliberate focus on reinvestment translated into tangible benefits for our guests, employees and the broader business. In a challenging macro-economic environment, characterised by high inflation and subdued corporate travel, we demonstrated resilience by growing revenue by 13% and increasing occupancy by two percentage points to 58%. Our food and beverage revenue also saw a notable 22% increase. Additionally, our BAR pricing strategy continues to optimise rates effectively, delivering value to our guests. Beyond these encouraging numbers, what sets this year apart is the way we invested in our people and properties, strengthening our foundation.
Q: Can you talk us through some of the strategic highlights from the year?
A: One of the key highlights has been our strategic reinvestment across several fronts. From completing phase 2 of our solar installations, where 41 hotels now benefit from renewable energy, to enhancing our food and beverage offerings, these initiatives reflect our commitment to sustainability and guest satisfaction. We also completed significant refurbishments, ensuring our properties not only meet but exceed guest expectations.
Q: What were your main challenges and how did the business adapt?
A: We began the year with strong demand with occupancy rates approximately eight percentage points ahead of the prior year in the first quarter. However, prolonged high inflation, rising interest rates and continuous load-shedding, combined with political uncertainty ahead of the South African national elections, started to weigh heavily on corporate demand and consumer purchasing power. Government austerity measures imposed by National Treasury in October further dampened demand.
While the Western Cape saw the fastest recovery in occupancy and rates, areas like KwaZulu-Natal faced challenges, including sporadic closure of beaches, the departure of many Durban beachfront businesses, and safety and security concerns. Despite these headwinds, we adapted by focusing on operational efficiencies, particularly in energy management, through expanded solar power initiatives and continued investment in our properties.
Q: How are you positioning the business for the future?
A: We’re positioning ourselves for future growth by continuing to invest in technology and sustainability. We’re exploring new energy storage solutions to complement our solar installations, building water resilience through borehole, filtration and water storage installations, and have authorised capital commitments of R459.4 million (€24m) for the 2025 financial year, focused on hotel modernisation and technology investments, including a re-engineered loyalty programme. We’re also pursuing expansion opportunities in high-growth areas in South Africa, further strengthening our footprint and delivering long-term value to our shareholders.
