Despite strong revenue growth and its best occupancy rate since pre-Covid-19, City Lodge Hotels saw its half-year profit decline by 5% while earnings remained flat.

The company explained that it is operating amid constrained consumer and business spending, though there are green shoots in South Africa’s economy that could translate to faster growth going forward.

City Lodge Hotels is a hospitality giant based in South Africa that operates 57 accommodations across Southern Africa.

The group is known for four accommodation styles, namely its Courtyard Hotels, City Lodge Hotels, Town Lodges, and Road Lodges.

On Thursday, 19 February, City Lodge released its results for the six months ended 31 December 2025, which revealed a mixed bag.

The company’s revenue jumped by 12% to R1.14 billion, while its operating profit increased by 3% to R239.87 million.

However, its profit for the period declined by 5% to R114.62 million, while its basic earnings remained flat at 21.6 cents per share.

City Lodge explained that it has capitalised on improved economic trends in South Africa over the past six months, particularly the tailwinds that came from the country hosting the G20 and B20 conferences in 2025.

This allowed the group to report a 4.2 percentage point increase in occupancy to reach 61.6%, while its room rates continued to beat inflation, increasing revenue from this source by 10%.

Alongside this growth came a 17% increase in food and beverage revenue, boosted by the group’s refreshed menus and restaurants in some hotels.

“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,” CEO Andrew Widegger said.

“As the Government of National Unity moves forward with its agenda, there has been an increase in government spending.”

CFO Dhanisha Nathoo said the hospitality industry has been an early beneficiary of this positive investment activity and the renewed economic activity across the country over the last six months.

This, she said, is what helped City Lodge deliver its highest occupancy since pre-Covid-19, at 61.6%.

Looking ahead, Widegger said the group expects to benefit from improved trading activity.

The company declared an interim dividend of 8 cents per share, up 33% from the prior year.

This article appeared in the Daily Investor.