City Lodge Hotels is stepping up its South African expansion after international tourists helped the hotel group deliver a 10% increase in revenue and a 15% rise in EBITDAR for the year ended June 2026.

The Johannesburg-listed hotel operator, which runs 56 hotels across South Africa, said overseas travellers helped offset weaker domestic leisure demand as South Africans grappled with rising living costs.

The group is now pursuing new properties in high-demand tourism markets, particularly the Western Cape and KwaZulu-Natal.

International tourism proved a key buffer for the group, with the Western Cape recording a 21% increase in revenue.

Five of City Lodge’s hotels in the province were recently refurbished, positioning the portfolio to benefit from continued demand for South Africa as an affordable international holiday destination.

International tourism cushions domestic pressure

City Lodge said its performance was strong through the first three quarters of the financial year before international conflicts affected travel and discretionary spending in the final quarter.

The war between the US and Iran pushed up oil prices and living costs, putting pressure on travel expenses and causing occupancy to soften in the fourth quarter, although it remained slightly ahead of the previous year. Weekend stays and leisure breaks were particularly subdued.

Despite the late-year pressure, diluted headline earnings per share increased 4% to 34.4 cents, while adjusted diluted headline earnings per share climbed 20% to 41.6 cents.

The stronger results supported a 22% increase in the final dividend to 11 cents from 9 cents a year earlier.

Restaurants and new hotels drive next phase

City Lodge is also expanding beyond rooms. It opened three bespoke luxury restaurants in Cape Town, Umhlanga and Gqeberha, helping its food and beverage business deliver a 14% increase in revenue and contribute 20% of group revenue.

Average room rates rose 7%, matching the previous year’s increase. Total operating costs climbed 9%, although costs per room sold increased by a more modest 6%, as the group worked to contain inflation and the cost of unreliable municipal services.

For 2027, City Lodge plans to expand its solar programme and add water-resilience measures across its properties.

It is also actively pursuing hotel expansion opportunities in the Western Cape and KwaZulu-Natal as it builds on its 56-hotel South African network.