City Lodge Hotels has today (19 February 2026) announced its interim results for the six months to 31 December 2026. The group’s strategy has empowered the move from stabilising trading to building momentum in the portfolio which delivered a 12% increase in revenue, a 39% increase in cash generated by operations, and enabled the group to repurchase 6% of its issued shares.
Highlights of the interim results for the six months to 31 December 2025 are as follows:
Group occupancy…………………………………………………………….. 61.6% up 4.2% points HY2025: 57.4%
Average room rate……………………………………………………………………. up 4% HY2025: up 10%
Revenue:…………………………………………………………………………. R1.14bn up 12% HY2025: R1.02bn
Adjusted EBITDAR………………………………………………………… R371m up 16% HY2025: R319m
Adjusted EBITDAR margin…………………………………………… 32.5% up 1.3% points HY2025: 31.2%
Adjusted headline earnings………………………………………. R139m up 27% HY2025: R110m
Cash generated by operations………………………………… R347m up 39% HY2025: R250m
Earnings and headline earnings per share (diluted) 21.5c flat HY2025: 21.6c
Adjusted headline earnings per share (diluted)……… 26.1c up 33% HY2025: 19.6c
Dividends declared per share – Interim…………………………. 8c up 33% HY2025: 6c
Reporting on a solid set of results, Chief Executive Officer Andrew Widegger says, “City Lodge Hotels capitalised on improved economic trends in South Africa and B20 and G20 tailwinds to deliver a 4.2% point increase in occupancy to 61.6% over the period. Room rates continued to beat inflation, with average rate increasing by 4%, which had a complementary result of a 10% increase in rooms revenue. The growth in occupancy, aided by the newly refreshed menus and restaurants in some hotels, has enabled food and beverage revenue to grow by 17% in the six months under review.”
He furthers, “Whilst consumer and business spending remains constrained, there are distinct green shoots and positive sentiment in the South African economy, aided by the hosting of the B20 and G20 summits last year, which has helped deliver promising GDP growth. As the Government of National Unity (GNU) moves forward with its agenda, there has been an increase in government spending.”
South Africa’s removal from the Financial Action Task Force grey list in October 2025, S&P credit rating upgrade, downward revisions to inflation targets, and decreases in interest rates have attracted renewed investor interest. City Lodge Hotels has benefitted from the renewed government mobilisation and increased business activity.
All regions within South Africa benefitted from the growth in occupancy demand, with Gauteng, KwaZulu-Natal and Eastern Cape leading regionally.
Within SADC, Mozambique and Namibia performance beat expectations, as the hotels achieved strong trading improvement in both room and food and beverage sales. Botswana is showing some signs of recovery, and we are optimistic that the growth in the local economy will boost government and corporate demand.
FINANCIAL REVIEW
“Hospitality is an early beneficiary of positive investment activity and the renewed economic activity across the country over the last six months has delivered the highest occupancy since pre-Covid-19, at 61.6%, which is 4.2% points ahead of the prior period,” notes Chief Financial Officer Dhanisha Nathoo.
“City Lodge Hotels yield management initiatives continue to optimise average room rate (ARR) growth, which grew by 4% on the prior period. This improvement resulted in an overall 12% increase in total revenue for the six months ended 31 December 2025 to R1.14 billion (HY2025: R1.02 billion). Rooms revenue was up by 10% to R898.5 million (HY2025: R815.0 million).”
Food and beverage (F&B) revenue has leveraged the additional occupancy in the hotels, the newly refreshed restaurants and fresh bespoke menus to deliver a 17% increase to R233.9 million (HY2025: R200.2 million), and it now accounts for 20.5% (HY2025: 19.6%) of total revenue.
“We prioritised cost containment, which resulted in a 9% increase in total operating costs despite the higher occupancies. Operating cost per room sold increased by only 3%,” Dhanisha adds.
The combination of strong revenue growth and well controlled costs delivered an Adjusted EBITDAR, which excludes unrealised foreign currency (losses)/gains, growth of 16.3%, and an Adjusted EBITDAR margin growth of 1.3% points to 32.5% (HY2025: 31.2%).
The 8% increase to salaries and wages to R312.6 million (HY2025: R288.8 million) was largely aligned to the annual inflationary increase offered to staff of 5.5% in August 2025, including additional contract staff required to support the additional occupancy and F&B volumes. The group has mitigated the average 13% utility price increases over the last year through solar generated power at 41 hotels, and borehole and filtration water supply at 14 hotels. Property costs have increased by only 6% to R101.8 million (HY2025: R95.9 million).
Rooms related costs of R114.5 million (HY2025: R104.5 million) are mainly variable in nature, and increased by 10% during the period, mainly due to commissions paid to travel agents for growth in government and corporate sector travel volumes. F&B costs of R89.9 million (HY2025: R77.6 million), which had a 16% increase, was largely aligned to F&B revenue growth of 17%. F&B gross profit margins have improved marginally to 61.5% from 61.2% in the prior period.
The strengthening of the South African Rand against other currencies resulted in an unrealised loss on foreign exchange of R24.7 million (HY2025: gain of R10.9 million) mainly in Mozambique on the intercompany Rand denominated loan.
Depreciation for the year of R99.2 million (HY2025: R89.5 million) includes depreciation of capitalised leases. The 11% increase relates to depreciation on the newly refurbished hotels in the portfolio.
Lease related expenses (i.e. depreciation on right-of-use assets of R47.3 million and interest expense on leases of R63.7 million) exceeds cash lease payments of R91.4million by R19.6 million.
Taxation amounting to R56.5 million (HY2025: R47.2 million) increased by 20%, with an effective tax rate of 33% (HY2025: 28%), due to the impact of the non-deductible unrealised foreign exchange losses.
Profit after tax decreased by 5% to R114.6 million (HY2025: R120.4 million), whilst diluted earnings and diluted headline earnings per share decreased by only 0.5% to 21.5 cents (HY2025: 21.6 cents), due to the reduced number of shares in issue following the share buy-backs during the period.
However, adjusted headline earnings for the period, which excludes unrealised foreign currency (losses)/gains, is up by 27% to R139.3 million (HY2025: R109.5 million), and diluted adjusted headline earnings per share has increased by 33.2% to 26.1 cents (HY2025: 19.6 cents).
STRATEGIC UPDATE
“We repurchased and cancelled 36 million (6%) of issued shares at an average price of R4.00 per share and a total consideration of R144.9 million,” reports Dhanisha.
Good trading performance resulted in a 39% increase in cash generated by operations of R347.3 million (HY2025: R250.5 million), which has continued to fund the reinvestment in our cash generating assets through the extensive refurbishment programme at key hotels, and continued water and electricity resilience and sustainability initiatives.
The group completed five refurbishment projects during the period under review which included bedroom refurbishments at City Lodge Hotel Johannesburg International Airport, Courtyard Hotel Gqeberha and Courtyard Hotel Sandton. The restaurants and commercial areas at City Lodge Hotel Umhlanga Ridge and City Lodge Hotel V&A Waterfront were completed and newly branded in-house dining offers, which are bespoke to each hotel, were launched.
“We are also optimising our hotel portfolio with Courtyard Hotel Arcadia permanently closed in December 2025 as the hotel was in the process of being sold for a gross consideration of R37.3 million. Transfer of the property completed on 13 February 2026. In addition, the City Lodge Hotel Newtown lease will be expiring in May 2026, and the group has opted not to renew the lease. The hotel is scheduled to close on 31 March 2026. Both hotels had been loss making,” says Andrew.
OUTLOOK
Looking ahead, Andrew points out that the SA economy has gained momentum over the last six months, and is widely expected to continue to improve over the next 12 months.
“City Lodge Hotels expect to benefit through the calculated application of our strategy to reap the benefits of improved trading activity. Whilst we remain optimistically cautious, we ensure sustainable decision making to ensure the hotels meet and exceed the needs of guests through value and service,” he says.
Whilst January 2026 occupancy demand had a slow start and was down by 2% points to 42% (January 2025: 44%), however, total revenue was up by 4% compared to the comparative period, supported by strong ARR and F&B revenue growth of 9%. Similarly, February 2026 started slowly but has gained momentum over the last two weeks. February to date occupancy is 4% points down to 56% (February 2025 to date: 60%). However, total revenue is up by 5%, due to improved ARR and F&B revenue growth of 11%. We expect the positive momentum over the last two weeks to continue over the balance of the financial year.
Environmental resilience programmes are being prioritised over the next 12 months, as we build a more sustainable portfolio with the ability to withstand more climate and infrastructure challenges.
The group has signed a lease addendum to expand City Lodge Hotel Waterfall City by a further 55 rooms, with construction due to commence in April/May 2026 and to be completed by March 2027. The capital cost attributable to City Lodge Hotels will be around R21 million.
The group continues to seek and pursue selected opportunities for new hotels in high growth areas within South Africa.
DECLARATION OF DIVIDEND
Andrew is delighted to announce that the board has approved and declared an interim dividend (number 69) of 8.00 cents per ordinary share (gross) (HY2025: 6.00 cents) in respect of the six months ended 31 December 2025.
