Post on 21-Mar-2018
CITY LODGE
HOTELS LIMITED A n n u a l R e p o r t 2 0 0 1p e o p l e
p r o d u c t s
p o t e n t i a l
Group profile
1 Group activities
11 Financial highlights
12 Directorate
13 Executive chairman’s and
managing director’s report
16 Seven-year financial review
20 Corporate governance statement
21 Administration
21 Financial statements
44 Value added statement
45 Ownership of ordinary shares and
convertible debentures
46 Notice of annual general meeting
47 Form of proxy
IBC Members’ diary
THROUGH THE VISION of founder, Swiss-born Hans Enderle, and the financial backing
of the Mine Pension Funds, City Lodge Bryanston became the catalyst for what today is
South Africa’s leading selected services hotel chain.
FROM THE START, emphasis was placed on quality accommodation, homely ambience
and friendly service – and these are still hallmarks of the group today.
AFTER PIONEERING the quality, selected services hotel concept in South Africa, the
group was incorporated in July 1986 and has since substantially grown and diversified
its product offering to meet different travellers’ needs.
IN 1990, the second-tier Town Lodge concept was started and has proved highly
popular. On 18 November 1992, the group successfully listed on the JSE Securities
Exchange South Africa.
IN 1995, the group acquired a 50% interest in the companies associated with the
upmarket Courtyard Suite Hotel chain and also opened its first Road Lodge, a concept
aimed mainly at budget conscious travellers.
WITH SIX Courtyards (424 suites), ten City Lodges (1 474 rooms), six Town Lodges
(713 rooms) and ten Road Lodges (855 rooms), the City Lodge group has 3 466 rooms
and suites and ranks amongst the 250 largest hotel chains in the world.
ON THE OCCASION of the group’s 10th anniversary on 1 August 1995, The City Lodge
10th Anniversary Employees Share Trust was launched which enabled all employees to
become shareholders.
COMMITMENT TO SERVICE excellence from a highly motivated and dedicated staff is
a common thread throughout the group’s hotels which have developed a loyal clientele
of both business and leisure travellers over the past years.
The City Lodge Hotels group has come a long way
from its relatively humble beginnings – a 123-room
City Lodge in Bryanston, opened on 1 August 1985
You haven’t felt like this before
The Courtyard Suite Hotels offer the discerning guest an exclusive and gracious alternative to an ordinary
hotel. Each Courtyard has its own distinct, secure atmosphere, although they all share an air of elegance and
charm not often found today. There are three accommodation options available: studio suites and one or
two bedroomed suites, each of which offers satellite television, a lounge area with a dining table and a
kitchenette with refrigerator and microwave oven. A personal shopping service is also provided for guests
who supply the hotel with a list in advance of their arrival, and arrangements are made accordingly for the
kitchenette to be stocked with the finest quality food and beverages.
Suites
● Studio, one or two bedroomed luxury suites ● International direct dial telephone in each suite
● En-suite luxury bathroom ● Remote controlled colour television with
● Private access to your own suite M-Net and DStv
● Concealed kitchenette ● All suites are air-conditioned
● Digital safe in each room
Services
● Personal shopping service
● Intimate lounge area
● Courtesy bar (17h00 – 19h00)
● 24 hour enhanced security
● Secure parking just metres from your door
● An elegant boardroom for guest use
● Complimentary use of guest office and
electronic facilities
● Sparkling pool in landscaped garden setting
● Full English and Continental breakfast daily
● In-suite dining by arrangement with local restaurants
● Same-day laundry and dry cleaning service,
weekdays only
page 2
Growing > Despite a sluggish domestic economy
and disappointing foreign tourist arrivals, the group
achieved double-digit increases in revenue, earnings
and dividends
Current locations
Cape Town, Johannesburg
(Bruma Lake, Rosebank, Sandton),
Pretoria (Arcadia)
Port Elizabeth
The smart alternative for people who appreciate a hotel which is just as comfortable on
their pocket
City Lodge has become a household name in the southern African market, providing guests with
comfortable and tastefully decorated rooms which are the ideal place to make one’s own at the end of the
day – whether guests have been working or playing. Each room has an en-suite bathroom where one may
choose to soak in a long hot bath whilst deciding where to dine that evening.
Rooms
● Fully carpeted, spacious air-conditioned room with double bed
● Colour television with all popular channels and radio
● Digital safe in each room
● En-suite bathroom
● Tea and coffee making facilities and ice jug in every room
● Rooms with a sleeper-sofa available on request
● Rooms with two separate beds for twin accommodationServices
● Convenient locations, close to major routes
● 24- hour reception and check-in
● Delicious City Lodge breakfasts every
morning
● Sundowner bar
● 24-hour vending machines stocked with
snacks and cold beverage items
● Fax and photocopy services available
● Same-day laundry and dry cleaning
● Fitness room
● Sparkling swimming pool
● Boardroom
● Free and convenient parkingpage 4
People > The hospitality industry is all about people and
we pride ourselves as a group made up of people
serving and caring for people. After all, our stated
dynamic is “People Caring for People”
Current locations
Bloemfontein, Cape Town
(Pinelands, V&A Waterfront,
GrandWest), Durban, Johannesburg
(Johannesburg International Airport,
Bryanston, Sandton Katherine Street,
Sandton Morningside), Port Elizabeth
The smart alternative for people who have more sense than money
Very much like City Lodges, Town Lodges are also strategically located adjacent to motorways and major
routes. The rooms are slightly smaller, but nevertheless offer similar stylish decor and the customary comfort
of a double bed. En-suite you will find a maxi-shower with a glass door, a tiled built-in seat, a wall-mounted
and a hand-held showerhead.
Rooms
● Fully carpeted, spacious air-conditioned room with a double bed
● Colour television and radio with all popular channels
● Interleading family rooms available
● En-suite bathroom with maxi shower
● Tea and coffee making facilities and ice jug in every room
Services
● Convenient location, close to major routes
● Free easy parking
● 24-hour reception and check-in
● Traditional Town Lodge breakfast every
morning
● 24-hour vending machine for snacks and
beverages
● Fax and photocopying services available
● Same-day laundry and dry cleaning
page 6
Products > Our products are dynamic and constantly
evolving to meet the changing needs of our guests on
an ongoing basis
Current locations
Bellville, Johannesburg
(Johannesburg International Airport,
Midrand, Sandton Grayston Drive),
Nelspruit, Pretoria (Menlo Park)
Opening soon
Pietersburg
Why pay more
The best value in the City Lodge family of hotels is undoubtedly to be found at the Road Lodge, which offers
unbelievable value-for-money and the same rate whether there are one, two or even three people sharing.
The comfortably furnished and tastefully decorated rooms all have an en-suite shower, toilet and hand basin.
Rooms
● Fully carpeted and air-conditioned
● Colour television and radio channels
● En-suite bathroom with shower, toilet and hand basin
● Double bed with single sleeper chair
● Working desk
● Direct-dial telephone for free local calls
Services
● A light breakfast is available
● 24-hour vending machines stocked with
snacks and beverages
● Ample free parking
● 24-hour reception service
● Coin and card call-boxes for trunk calls
Potential > We are constantly seeking ways to select
the most appropriate opportunities for the benefit of
all stakeholders
Current locations
Cape Town (N1 City), Durban,
Johannesburg (Brakpan –
Carnival City, Germiston Lake, Isando,
Johannesburg International Airport,
Randburg, Rivonia), Nelspruit,
Port Elizabeth
Opening soon
Kimberley
page 8
Why pay more
The best value in the City Lodge family of hotels is undoubtedly to be found at the Road Lodge, which offers
unbelievable value-for-money and the same rate whether there are one, two or even three people sharing.
The comfortably furnished and tastefully decorated rooms all have an en-suite shower, toilet and hand basin.
Rooms
● Fully carpeted and air-conditioned
● Colour television and radio channels
● En-suite bathroom with shower, toilet and hand basin
● Double bed with single sleeper chair
● Working desk
● Direct-dial telephone for free local calls
Services
● A light breakfast is available
● 24-hour vending machines stocked with
snacks and beverages
● Ample free parking
● 24-hour reception service
● Coin and card call-boxes for trunk calls
Potential > We are constantly seeking ways to select
the most appropriate opportunities for the benefit of
all stakeholders
Current locations
Cape Town (N1 City), Durban,
Johannesburg (Brakpan –
Carnival City, Germiston Lake, Isando,
Johannesburg International Airport,
Randburg, Rivonia), Nelspruit,
Port Elizabeth
Opening soon
Kimberley
page 8
page 10
City Lodge
Road Lodge
Town Lodge
Courtyard Suite Hotels
Growing our footprint
CAPE TOWN
DURBAN
JOHANNESBURG
PRETORIA
CITY LODGE
HOTELS LIMITED
City Lodge Hotels Limited
Financial highlightsfor the year ended 30 June
2001 2000
%
Turnover (R’m) 193,3 16 166,2
Operating profit (R’m) 90,9 15 78,9
Headline earnings (R’m) 38,3 14 33,5
Headline earnings per share (cents) 135,5 14 118,4
Fully diluted headline earnings per share (cents) 103,7 12 92,7
Dividends per share (cents) 62,5 12 56,0
Operating cash flow per share (cents) 156,2 19 131,1
Convertible debentures (cents)
Price at year end
400
1 000
1 600
2 200
2 800
3 400
4 000
2001200019991998199719961995199419931992
Ordinary shares (cents)
Price at year end
400
1 000
1 600
2 200
2 800
3 400
4 000
2001200019991998199719961995199419931992
p e o p l e
p r o d u c t s
p o t e n t i a l
page 11
Stock exchange performance
page 12
City Lodge Hotels Limited
Board of directors
From left standing:
A J BALABANOFF● (41)
Operations Director
23 years experience in the hotel
industry
G D BISSET● (47)
Operations Director
28 years experience in the hotel
industry
A C WIDEGGER*● (35)
Financial Director
Chartered Accountant (SA)
From left seated
H R ENDERLE (59)
Group Executive Chairman
45 years experience in
the hotel industry
C ROSS● (44)
Managing Director
27 years experience in the hotel
industry*Member of audit committee †Member of remuneration committee
●Member of executive committee
D C COUTTS-TROTTER* (39) W M DICKSON (70) D A HAWTON† (64)
F W J KILBOURN (39) I N MATTHEWS*† (56)
A B MORRIS● (32)
Property and Development
P M SCHOEMAN● (36)
Sales and Marketing
P J TATE● (45)
Operations
Divisional directors
Non-executive directors Executive directors
Dear fellow shareholders,
The theme of this year’s report is Growing
through our three Ps – People, Products
and Potential. Unquestionably the
most important is people, for without
them we would not have a business on
which to report.
Ours is essentially a people business and
it is on people, whether they be staff,
guests, shareholders or suppliers, that our
group has depended since our humble
beginnings in 1985 and the same applies
all these years later. At 30 June 2001, the
group directly employed 872 staff and
had 928 registered share and debenture
holders. Not a vast conglomerate, but
certainly an important contributor to
the South African economy.
Far removed from a finite thing waiting
to be bought, we see our product as
something that is dynamic and constantly
evolving in order to meet the changing
needs of our guests on an ongoing basis.
There is simply no room for complacency
in a highly competitive environment.
As for potential, this is all about the
enthusiasm we have for the future
based on the quality of our people and
product and the great potential our
beautiful country has in terms of both
economic growth and tourism.
Opportunities abound and we are
constantly seeking ways to select the
most appropriate ones for the benefit
of all stakeholders.
Rest assured that the management and
staff of the City Lodge Hotels group are
committed to achieving growth through
these three Ps on an ongoing basis.
Growing . . . financially
Despite a sluggish domestic economy
and disappointing foreign tourist arrivals,
the group achieved double-digit increases
in revenue, earnings and dividends in
the year to 30 June 2001.
This was mainly due to an increase in
room nights sold, firmer room rates and
an increase in average occupancies to
71% from 69% in fiscal 2000.
Revenue rose 16% to R193,3 million and
operating margins of 47% for the full
year were almost 2% points higher than
at the interim stage as a result of both
firmer room rates and continued tight
cost control.
Fully diluted headline earnings a share
increased 12% to 103,7 cents, prompting
the directors to boost the annual dividend
payout by 12% to 62,5 cents a share.
This resulted in the automatic and com-
pulsory conversion of the 13,6 million
listed convertible debentures to
ordinary shares on a one-for-one basis.
Balance sheet strength has always been
a group priority and this was no
exception in 2000/2001. Net cash
inflow of R44,2 million from operating
activities, an increase of 19%, was
utilised to fund the major portion of the
capital expenditure of R78,3 million for
the period. Of this total, R52,3 million
was in respect of new hotels and the
balance to upgrade existing hotels.
Full year contributions from three new
hotels opened in December 2000 –
Road Lodge Port Elizabeth, Courtyard
Port Elizabeth and City Lodge
GrandWest – will help to boost
turnover in the year ahead.
Gearing levels remain low and the
group is poised to benefit from any
improvements in the flow of domestic
and foreign business and leisure travellers.
Hotels across the four brands –
Courtyard, City Lodge, Town Lodge
and Road Lodge – are operating well
and delivering a value-for-money
service to guests from the one-star to
four-star categories.
People caring for people
As has been mentioned in this report,
people are fundamental to the City
Lodge success story. Nurturing our
own people is a priority.
To this end, the group is taking great
strides towards reaching targeted
employment equity goals. This means
thoroughly embracing the spirit of the
legislation, not merely adhering to the
letter of the law. Substantial and
ongoing progress is being made
towards full implementation of our
employment equity plan by 31 May 2003.
page 13
City Lodge Hotels Limited
Executive chairman’s and managing director’s report
page 14
City Lodge Hotels Limited
Executive chairman’s and managing director’s report(continued)
Closely linked to employment equity is
our workplace skills plan which has
been accepted in its entirety by the
Tourism and Hospitality Education
Training Authority (THETA). As part of
the group’s commitment to training,
substantial capital and time has been
invested in the City Lodge Academy
which in December will produce its
first graduates from a comprehensive
three-year training programme.
While only two managers-to-be will
emerge from the first intake, another
eight trainees are in their second year
and six are in their first year of practical
and theoretical study, boosting our
management pool from the academy
in 2003 and 2004 respectively. It is also
gratifying to note that more than half
of the group’s entire workforce have
attained the lower level national
qualifications administered by the THETA.
A number of our staff have gone a
step further and have signed up to
study for the certificate and diploma
qualifications in hospitality supervision
and management.
These developments bode well for the
future as a more educated staff will
certainly play an important part in our
ongoing commitment to providing
quality service in everything that we do.
It was with great pleasure that we recently
announced the promotion of
Andrew Morris, Peter Schoeman and
Patrick Tate to divisional directors
responsible for Property and Development,
Sales and Marketing and Operations
respectively. We are confident that they
will make a valuable contribution to the
continued success of the group and to
the newly formed Executive Committee.
The committee, which comprises the
executive directors of the company and
the aforementioned divisional directors,
will meet at least monthly. The committee
will play a key role in implementing the
strategies and policies determined by
the board as well as in managing and
monitoring the operational aspects of the
business in accordance with approved
budgets and in compliance with best
management and operating practices.
Product
By focusing on our core philosophies
and values – essentially ”sticking to our
knitting“ – we believe we can continue
to grow our market niche and ensure
ourselves of a bright future. Ongoing
investment of capital and human
resources into making sure that the
group offers value for money in its
market segments will continue to
reap rewards.
We continue to forge ahead with
technological advancements, including
improving the functionality of our
web-site (www.citylodge.co.za) and
ensuring that our group is the most
bookable in the local hotel industry.
Importantly, the web-site is also being
used to link up with other travel
industry service providers such as car
hire firms and airlines.
Internet booths are being piloted at
some hotels and will most likely lead to
more widespread implementation as
we constantly seek to provide guests
with state-of-the-art services.
The Bid2Stay Internet auction site
continues to grow its ”hit rate“ and is
proving to be a useful tool in attracting
guests at off-peak times.
As part of the ongoing ”New Millennium“
conversion programme, a total of
R21,7 million was spent on upgrading
City Lodge Pinelands and City Lodge
Bloemfontein. Next in line for this
makeover of bedrooms, bathrooms and
technological functionality is City Lodge
V&A Waterfront.
In addition to the day-to-day routine
maintenance, the group has a
structured refurbishment programme,
which includes projects such as the
”New Millennium“ conversions and
regular softs replacements. This ensures
that the group keeps up to date with
the latest worldwide trends and remains
ahead of the local market by responding
to our guests’ ever-changing needs.
Over the past seven years, the group
has reinvested an average of 10% of
turnover into existing hotels on the
above programmes. This is very much
in line with international norms.
Towards achieving our target of 5 000
rooms and suites under management
by 2003, three new hotels were
opened during 2000/2001 – Road
Lodge Port Elizabeth, Courtyard Port
Elizabeth and City Lodge GrandWest.
There are now six Courtyard Suite
Hotels, ten City Lodges, six Town
Lodges and ten Road Lodges in the
group offering 3 466 rooms and suites
across South Africa.
This total will soon be boosted to 3 658
when Road Lodge Kimberley (90 rooms)
and Town Lodge Pietersburg
(102 rooms) are added to the repertoire
in early 2002. Both hotels are adjacent
to Sun International casino
developments and will establish the
group’s much requested presence for
the first time in the Northern Cape and
the Northern Province.
Potential
Negotiations are at an advanced stage
on other development sites that meet
our exacting location requirements and
further expansion announcements are
expected in the year ahead.
Despite saturation in some areas, South
Africa and some parts of Southern Africa
still hold considerable potential for
carefully targeted hotel development.
New sites are always being assesssed as
are new innovations that we believe
will help us to continue satisfying
regular clientele and turning first-time
guests into valued repeat visitors.
If we are to realise our potential, we
must keep on listening to our
customers. It is through close
monitoring of guests’ comments that
we have increased the number of
twin-bed rooms in our hotels and
piloted Internet booths. Other changes
and innovations are being examined to
broaden our range of services and
ensure that we are always on the
lookout for ways of complementing
and improving our product offering.
Looking to the future, there are some
bright lights on the horizon for our
group and the broader hospitality
industry. The World Summit on
Sustainable Development to be held in
Johannesburg in September 2002 is
scheduled to be the biggest
international event ever to be staged in
South Africa. Not only will it boost hotel
occupancies and benefit a range of
other service providers for the duration
of and for the weeks leading up to the
summit, it will also hugely boost
awareness of South Africa as a business
and tourism destination. The spin-offs
are sure to be substantial for our country.
The Cricket World Cup to be hosted by
South Africa in 2003 is another
international event that we can look
forward to with eager anticipation. It is
pleasing to note the ongoing enthusiasm
of our Minister of Tourism and
Environmental Affairs and the
appointment of former South African
ambassador to the UK, Cheryl Carolus,
to head up SA Tourism, is certainly a
positive step.
There is no doubt that our country has
enormous untapped potential that
needs to be realized in the interest of all
South Africans – and our group will
continue to enthusiastically do our bit.
Given recent trading trends, the ongoing
negative publicity surrounding the
Zimbabwe situation and the tragic events
of 11 September in the United States
of America, it is difficult and unwise to
predict occupancy levels going forward.
The negative occupancy trend
experienced between April and June
has continued into the current financial
year and it therefore does not appear
likely that the group will increase room
occupancies in the year ahead.
Notwithstanding, it is anticipated that
real earnings per share growth will
be achieved for the full year to
30 June 2002.
We can’t spell success without “u”
It is the commitment and dedication of
staff, shareholders, guests and suppliers
that has brought our group its success
thus far and they will be the essential
ingredients into the future. For your past
loyalties, we are sincerely grateful. We
now invite you to join us as we venture
into the future with a firm foundation
for growth through our people, our
products and the potential we see for
both our company and our country.page 15
City Lodge Hotels Limited
Executive chairman’s and managing director’s report(continued)
Clifford Ross
Group Managing Director
Hans Enderle
Group Executive Chairman