Business

More unique restaurants and hotels coming to South Africa

Jonathan Hoyle

 ·11 Sep 2026

City Lodge Hotels has reported a solid jump in earnings over the last financial year despite difficult economic conditions in South Africa, buoyed by international visitors.

This is prompting the group to expand its operations, opening new “bespoke” luxury restaurants and planning new hotels in popular tourist provinces like the Western Cape and KwaZulu-Natal.

The group said its performance was strong in the first three quarters of the year, before international conflicts subdued travel and holiday spending in the last quarter (ending June 2026).

The war between the US and Iran drove up oil prices and the cost of living, with travel costs being hit particularly hard.

City Lodge said the conflict “led to a softening in occupancy in the last quarter, albeit slightly ahead of the prior year.”

“Weekend stays and leisure breaks were particularly subdued over this period.”

Despite difficult economic conditions, the company recorded increases in revenue and earnings, with group revenue rising by 10%.

Earnings Before Interest, Taxation, Depreciation, Amortisation, and Rent (EBITDAR) also rose by 15% for the 2026 financial year.

City Lodge said that while South Africans had been hit hard by the recent rising living costs, international travel had been largely immune.

“International travel has been insulated from the domestic pressures as South Africa continues to be an affordable, sought-after holiday destination,” the company said.

“The Western Cape, with five of our hotels having been recently refurbished, benefitted from international travel and achieved a 21% increase in revenue.”

Cape Town has become a particularly popular holiday destination for international travellers in recent years due to its natural beauty and lower costs compared to other coastal destinations worldwide.

International travel support enabled City Lodge to keep its average room rate increase to 7% for the year, unchanged from the previous financial period.

Diluted headline earnings per share rose by 4% to 34.4 cents, while adjusted diluted headline earnings per share saw a 20% increase to 41.6 cents.

The strong financial performance for 2026 resulted in a 22% increase in the company’s final dividend of 11 cents, up from 9 cents in 2025.

City Lodge keeps growing

Amid City Lodge’s strong performance in 2026, the group opened three new luxury restaurants along South Africa’s coastline.

The new restaurants were opened in Cape Town, Umhlanga, and Gqeberha, and are described by the group as “bespoke restaurants.”

Its food and beverages segment was one of City Lodge’s best-performing portfolios, with revenue rising 14% in the last financial year and contributing 20% to total revenue.

While results were strong, City Lodge said that cost-containment measures remain important to combat municipal service-delivery failures and rising inflation.

“Cost containment remains a key area of focus, as we try to mitigate the above-inflation increases in utility costs, and the failing municipal services, which often result in additional contingent supply costs,” it said.

The impact of lapses in municipal service delivery and rising inflation driven by global conflict resulted in increased operating costs for City Lodge.

“Total operating costs increased by 9%, but operating costs per room sold only increased by 6%,” the company said.

For the future, the group said it would focus on expanding its solar energy projects and improving water resilience for its sites.

“Environmental sustainability and resilience solutions continue to be a priority to mitigate the water and electricity supply challenges and high annual cost increases,” it said.

“Phase 3 of our solar installation roll-out and the addition of more water resilience and sustainability solutions have been earmarked for the financial year 2027.”

The group also said it would focus on continued expansion in the next financial year, to add to its 56 existing hotels in South Africa.

It said these expansions would ideally focus on popular tourist destinations, including the Western Cape and KwaZulu-Natal.

“The group is actively pursuing expansion opportunities, specifically in areas such as the Western Cape and KwaZulu-Natal,” it said.