At a Glance
- City Lodge repurchased 42.7 million shares, reducing float and boosting shareholder value.
- Allan Gray’s holding climbs to 15.1% as City Lodge cancels repurchased shares.
- Buybacks highlight investor confidence in South Africa’s hotel and tourism rebound.
Allan Gray, one of South Africa’s largest institutional investors, has seen the value of its stake in City Lodge Hotels Limited rise above $20 million after the Johannesburg-listed hotel group repurchased and cancelled millions of its own shares.
The disclosure, filed on October 14, 2025, confirms that Allan Gray’s clients now hold 15.1349 percent of City Lodge’s issued securities, up from roughly 13 percent previously. The increase stems from the hotel group’s share buyback programme, which has reduced the overall number of shares in issue.
City Lodge steps up capital returns
Between March and October 2025, City Lodge repurchased 42.7 million shares, equal to 7.14 percent of its issued capital, at an average price of R3.99 ($0.22), spending about R170 million ($9.77 million).
The programme, funded from internal cash and existing debt facilities, forms part of the board’s strategy to enhance shareholder value while maintaining a healthy balance sheet.
Following the buybacks, City Lodge applied to delist and cancel 35.1 million of the repurchased shares and now holds about 7.5 percent of its equity in treasury.
The company said the board had satisfied the solvency and liquidity test required under South African law, and notified the Takeover Regulation Panel of the resulting change in beneficial interests.
Post-pandemic recovery and disciplined growth
City Lodge, which operates 58 hotels across South Africa and southern Africa, is in the midst of a measured recovery following pandemic-era disruptions.
For the year ended 30 June 2025, the group reported R2 billion ($115.01 million) in revenue, and R213 million ($12.25 million) in profit after tax, while maintaining a R0.09 dividend.
The group completed eight hotel refurbishments during the period and has rolled out solar power to 41 properties, part of a wider efficiency drive that supports its debt-free position and sustainability agenda.
Allan Gray builds exposure to hospitality rebound
The rise in Allan Gray’s holding underscores continued institutional confidence in City Lodge’s turnaround and the broader recovery of South Africa’s hospitality sector.
At current market prices, the fund manager’s interest, roughly 15.1 percent of the company, is worth just over R380 million ($21.86 million).
Reduced share float from the buybacks could lift earnings per share and support further price appreciation if travel demand and occupancy levels continue to improve into 2026.
City Lodge’s share price has traded between R4.96($0.285) and R4.10($0.236) this year, reflecting renewed investor appetite for South African leisure and tourism stocks as inflation stabilizes and business travel slowly rebounds.
A leaner, steadier City Lodge
With its balance sheet strengthened and shareholder base increasingly concentrated among long-term institutional investors, City Lodge enters 2026 as a leaner, more efficient operator.
The buyback-driven rise in Allan Gray’s stake signals faith in management’s capital discipline and in the continued normalization of hotel demand across South Africa.
