CITY LODGE HOTEL GROUP

WHAT we do

The City Lodge Hotel Group is a multi-brand chain offering a variety of locations, features and budget choices to business and leisure travellers.

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OUR strategy measured

Being a “guest centric” selected service hotel group is expected, we however believe that what really makes a difference is the way in which our passionate people deliver consistently caring service to our guests with kindness. This is the reason why we have formed a base of loyal guests, who have continued to stay with us over the past 32 years. It is with this in mind that we analyse our strategic achievements of the past year, and look to unpack how we will continue to deliver on our commitment to long-term sustainability to you, our providers of capital.

 

TO CONSOLIDATE OUR
POSITION WITHIN
SOUTH AFRICA


Occupancy performance
The group’s South African occupancies for the period reflected an occupancy of 63% compared to 66% in the prior year. The declining trend of occupancies throughout the year were largely attributable to the weak performance of the local economy. The majority of the group’s available inventory is, however, well placed to benefit from possible trading down, as both corporate and leisure travellers seek to limit costs incurred on travel. The introduction of new capacity in certain cities around the country has further added to increased pressure on occupancies, along with the growing number of establishments entering the shared economy. Government travel has seen a decline over the past year as a result of tighter budgetary control, however, some benefit is being realised due to the cost-containment initiatives being implemented by the National Treasury. Growth in demand from online travel agencies, mostly used by international travellers, has continued even though the currency has strengthened substantially over the past year.

The year ahead will continue to be a challenging one, as the performance of the local economy is not expected to improve in the short term, with growth of less than 1% expected.

Average daily rates (“ADR”)
In line with the ADR of the industry, the group has seen an inflationary improvement in current achieved room rates. This improvement is, however, not as significant as for the rest of the industry, due to the consistent rates philosophy of the group over the long term and the relative strength of the Western Cape market and the higher weighting in number of rooms for the rest of the industry. This philosophy results in more predictability for corporate travellers.

In order to drive occupancy growth over weekends, the group has a number of special packaged rates in place to encourage group and family travel such as “Team Scheme” and “Spouse on the House”. Participating in South African Tourism’s Sho’t Left campaign, encouraging South Africans to travel at home, further exposes our various hotel brands to new markets. Our unique auction website, www.bid2stay.co.za, allows guests to bid online for discounted accommodation and other benefits across our portfolio in South Africa. These rates are particularly competitive for the cost-conscious traveller.

Expanding in South Africa
While no new hotels were opened over the past year, the group has commenced with the extension of the 303-room City Lodge at OR Tambo Airport by adding an additional 62 rooms. As part of this extension, the hotel will also undergo a minor refurbishment of the rooms and commercial areas to ensure a consistent scheme throughout the hotel. This construction will allow for the assessment of some new construction techniques to be assessed for use in future developments. Plans are also underway for a new Town Lodge in Umhlanga Ridge and Road Lodge in Polokwane.

Keeping our hotels in great shape
Over the years, the group has followed a stringent refurbishment programme maintaining a high standard in the quality of our hotel product. This year was no exception with refurbishments having taken place at Road Lodge Johannesburg International Airport and Road Lodge Durban, and with future refurbishments planned for City Lodge Hotel Durban, Town Lodge Johannesburg International Airport and Road Lodge Isando in the coming year.

Continuous focus on quality is maintained at all our hotels through our ongoing maintenance and minor refurbishment programmes.

Guest satisfaction
Knowing what our guests think about us is key to being able to consistently deliver on our value proposition. Guest comments and feedback are received directly from our guests or through our online Rate-Us questionnaire. We constantly monitor posts on various social media platforms, including Facebook, Twitter, TripAdvisor and Hellopeter.com, where all comments are analysed and complaints are attended to.

The Rate-Us questionnaire received approximately 19 000 responses during the year, an increase in the volume of responses of 15%, yielding an average customer satisfaction score of 86% (2016: 86%). Using this instant feedback mechanism, our guests are able to share their experiences directly, allowing us to give them more of what they want, and addressing any concerns which they may have. TripAdvisor awarded no fewer than 12 of our hotels with certificates of excellence for 2017, based squarely on guest experiences and ratings.

Human capital
Our human capital strategy is driven by structuring and measuring our performance against the “Investors in People” standard. As a quality hotel provider, one of the most important contributors towards the continued success of our performance is the performance of our people, and the management of our human capital is therefore a key focus area for the group. Our “Investors in People“ recognition clearly demonstrates our ongoing commitment towards growing and empowering our people.

The Investors in People standard measures the following criteria and clearly demonstrates our focus in this regard:

Indicator     Meaning     Category  
Leading and inspiring people     Objectives are clear and leaders inspire and motivate people to achieve against them. People in the organisation trust leaders.        
Living the organisation’s values and behaviours     People and leaders act in line with the organisation’s values at all times and they have the courage, and support, to challenge inconsistent behaviours.     LEADING  
Empowering and involving people     A culture of trust and ownership exists in the organisation and people feel empowered to make decisions and to act on them.        
Managing performance     Objectives within the organisation are fully aligned, performance is measured and feedback is used.        
Recognising and rewarding performance     Recognition and reward is clear and appropriate, creating a culture of appreciation where people are motivated to perform at their best.     SUPPORTING  
Structuring work     The organisation is structured to deliver on its ambition. Roles are designed to deliver on organisational objectives and create interesting work for people, while encouraging collaborative ways of working.        
Building capability     People’s capabilities are actively managed and developed allowing them to reach their full potential and ensuring that the organisation has the right people in place, at the right time, to fill the right roles.        
Delivering continuous improvement     There is a focus on continuous improvement where people use internal and external sources to come up with new ideas and approaches, supported by a culture that encourages innovation.     IMPROVING  
Creating sustainable success     The organisation has a focus on the future and is responsive to change. Leaders have a clear understanding of the external environment and the impact this has on the organisation.        

The group’s ability to attract and retain skilled human capital is underpinned by the provision of an employee value proposition that specifically highlights clearly defined career pathing and succession planning. The efficacy of this approach is demonstrated in the following comparative turnover information, which in our South African operations indicates an annual level of turnover which at 8,69% is below the industry norm.

Year   Voluntary
turnover
    Involuntary
turnover
    % of total
headcount
 
2014/15   61     24     7,74  
2015/16   62     43     8,71  
2016/17   60     37     8,69  

The group talent officer, assisted by line management, is responsible for the attraction, development and retention of high-calibre employees. All employees are afforded an annual development appraisal, ongoing assessments and feedback by supervisors and management ensures that skills and knowledge gaps are identified within current positions. Suitable employees for development into and within supervisory and management levels are acknowledged and proposed for inclusion into succession pools or developed towards such. An emphasis is placed on the development of previously disadvantaged individuals in order to ensure that the group can work progressively towards achieving its employment equity targets.

Training and development
The skills development committee meets at least bi-annually in order to determine the group’s skills development requirements.

The committee has been mandated to deal with skills development issues and committee members are therefore knowledgeable with regard to legislation surrounding skills development. The committee consists of the divisional director: human resources, the group’s skills development facilitator, a union representative, shop stewards from the regions and members of staff from different levels and backgrounds elected by their constituencies.

The group continues to focus on providing learnership opportunities, both internally and externally, as well as graduate internships for students with diploma and degree level hospitality qualifications.

The group has a registered skills development facilitator who submits a workplace skills plan annually and reports on training achieved against that plan.

A training coordinator assists the skills development facilitator with logistics and administration and allows for a greater focus by the skills development facilitator on ensuring return on investment in respect of the training interventions provided.

Training interventions covered training priorities ranging from legislative compliance to management and leadership skills, as well as client service and employee development.

A total of 82 people were promoted in the group during the year, 63% of whom were female.

    2017       2016  
African   57       37  
Coloured   12       8  
Indian   0       0  
White   13       3  
Total   82       48  

The comparative report below is aligned with the reporting period for the Sector Education and Training Authority that requires “calendar year” reporting and organising of training activities.

    1 January 2016
to 31 December
2016
      1 January 2015
to 31 December
2015
1 January 2014
to 31 December
2014
 
% of total payroll spent on training   3,9       4,0 3,2  
% of total payroll spent on training previously disadvantaged employees   3,2       3,4 2,7  
Total number of interventions attended by all employees   11 320       9 459 8 736  
Total number of interventions attended by black employees   10 041       8 215 7 391  
Total number of interventions attended by black female employees   6 441       5 586 5 095  
Total spend on training and development   R9,7 million       R9,0 million R6,1 million  

With regard to training considered as eligible for the pivotal grant, the following highlights are noted:

  • Work integrated learning – This opportunity was provided to 100 hotel school students from hotel schools across South Africa, to gain practical experience in the group’s hotels pursuant to the completion of their formal learning programmes. This programme not only serves to provide students with the opportunity to gain experience, but also allows the group to assess these students as potential employees for the future.
  • City and Guilds qualifications – The group provides its permanent employees with the opportunity to attend these programmes and thereby obtain an internationally recognised qualification. This contributes to the group building a pool of skills for succession planning and assists in career pathing. A total of 18 employees wrote and passed their City and Guilds exams in the first half of the financial year gaining various certificates, diplomas and advanced diplomas while a further 85 employees were enrolled during the second half of the year.
  • The group also provides learnership opportunities to employed and unemployed individuals and is currently involved in providing learnerships for disabled learners in partnership with the South African Disability Development Trust. We are currently hosting 35 disabled and previously unemployed learners, some of whom we again hope to absorb into our operations upon successful completion of their programme. To continue the programme into next year we have registered an additional 15 learners on this learnership, who will be working towards various qualifications.

Employee and industrial relations (“ER and IR”)
All ER and IR issues are dealt with in an inclusive manner, with the group preferring to invite participation on all substantive issues that may have an effect on the employment relationship or on employees’ conditions of work. The group currently recognises, and has a recognition agreement with one trade union, SACCAWU, which is representative of 16,5% of total employees and 18,7% of those occupying positions within the defined bargaining unit.

No days have been lost due to industrial action during the period under consideration.

The group continues to use its programme “high-performance people” as the model for its ER, and courses are held periodically for supervisors and management. This programme is also made available to shop stewards from time to time to ensure complete understanding of the company’s policies and procedures. In addition, all levels of management are trained in the principles of “managing with intent” to ensure that best practice management techniques are applied within the group.

Labour utilisation
An analysis of sick and absent days recorded in the group indicates a loss of 1,7% of all working days available due to sickness and absence during the year.

Sick leave is monitored on an individual basis to ensure that patterns are noted, where possible, to either ensure assistance and intervention or to take steps where possible abuse is noted. Incidents of absence are monitored and dealt with through the group’s disciplinary procedures.

Health and safety
Although the group’s properties do not represent dangerous working environments, all necessary precautions and measures are taken to ensure the safety of our employees. This includes the adherence to strict guidelines in terms of monitoring and implementing health and safety requirements. Each hotel has established a health and safety committee, as well as appointed responsible persons in terms of the Occupational Health and Safety Act.

The group utilises the software program Worktrainer to record and monitor all health and safety compliance. Compliance with the health and safety policy and legislation is reviewed as part of the internal audit process. In addition, the group maintains its commitment to ensuring that levels of hygiene, compliant with HACCP (“hazard analysis of critical control points”) legislation, are maintained at all hotels.

The group ensures that all contractors engaged in the delivery of services to the group are equally compliant in terms of their adherence to health and safety requirements.

The following incidents were experienced in our South African operations during the year:

    Number of incidents        
Nature of incident   2016/17       2015/16     General outcome  
In the kitchen – food preparation and cleaning   9       12     In all instances staff members either received first aid and returned to work immediately, or were booked off for a period and returned to work thereafter.  
Incidents on stairs and in built environment   10       7    
Due to carrying and lifting   1       0    
Repairs and maintenance related   3       4    
Total   23       23        

The year ahead

Performance over the year ahead is expected to be challenging, given the various challenges faced by the country and the economy. By maintaining focus on our operations and delivering a consistently high-quality product to our guests, we will present a compelling value offer to travellers in all sectors of the market. We are well placed to benefit from any increased economic activity in the economies in which we operate.

 

TO EXPAND OUR
FOOTPRINT BEYOND
SOUTH AFRICA’S BORDERS


Continued progress in growing our presence in Southern and Eastern Africa over the past year, is being made at a slow but steady pace.

The 147-room Town Lodge Windhoek, Namibia is expected to open in September 2017. This is slightly later than initially expected, however, the new hotel is already generating a good level of interest among local travellers and corporates. The 172-room City Lodge Hotel Two Rivers in Nairobi, Kenya is hot on its heels, with an expected completion towards the end of October 2017. City Lodge Hotel Dar es Salaam, a 147-room hotel located in Tanzania, is progressing well with its expected completion and opening in the first quarter of 2018. As a result of the delays in obtaining regulatory approvals, the
148-room City Lodge Hotel in Maputo, Mozambique is only expected to open mid-2018.

Trading outside South Africa in Gaborone, Botswana and Nairobi, Kenya has been under pressure, due to current economic conditions in the respective countries. Kenyans went to the polls in the country’s general election in August 2017, which following the previous general election, has led to some anxiety among travellers to the country, resulting in weaker trading in the months preceding it.

Future expansion
Investigations into opportunities in the rest of Africa continued during the course of the year, with visits to a number of countries in Africa, in order to identify suitable locations and investment opportunities. Where an opportunity was identified, a detailed feasibility was prepared taking into account a number of factors in order to assess the likelihood of a hotel’s success. This process is often a lengthy one, and may result in a significant amount of effort being lost if the parties are not able to reach satisfactory agreement on the terms.

On completion of the current projects, our non-South African hotel portfolio will comprise around 12% of our total number of rooms available and contribute 20% to 25% to our EBITDA once reaching operational maturity.

 

TO CONTINUE TO TRANSFORM
THE GROUP IN LINE WITH THE
B-BBEE CODES OF GOOD PRACTICE


The B-BBEE landscape within South Africa has seen some significant changes over the past year, with some level of interest from our guests and suppliers as to how the group continues to remain abreast of the latest developments.

During the year, the group established a transformation committee comprising members of the Exco and other senior managers. The purpose of the committee is to maintain oversight over the implementation of the various initiatives of the group, to implement relevant policy decisions and changes and to provide feedback on the group’s progress to the executive and board.

The group achieved an overall level 5 B-BBEE contributor rating under the amended Tourism Sector Codes during the year. This score as presented in the adjacent table reflected some areas of improvement from the prior year, although due to the changes implemented in the reduction of scorecard elements, a meaningful comparison is not possible. The group’s failure to achieve the subminimum scores under the ownership and supplier development elements, however, resulted in a penalty of one level being applied to the initial rating achieved. The compliance form required by the BEE Commission was submitted following the issuance of the group’s certificate in January 2017.

During the year, the group has placed significant emphasis and resources on improving the areas which resulted in the penalty being applied. With regards to ownership, the net value created in the hands of black people is influenced by the closing share price on the measurement date. Given the period of time which has passed since the implementation of the group’s 2008 BEE transaction, the current share price level and the value of outstanding debt, this element’s sub-minimum will not be achieved in the short term. Further consideration is also being given to the current funding arrangement, which has an expiry date of 31 December 2017.

With regards to supplier development, the group has identified three specific projects with existing suppliers over the past year, which have received our financial and employee support. By providing
R5,0 million in interest-free loans to these qualifying suppliers, one of our suppliers has expanded his business offering by buying new machinery. Another used the sum to pay their three-year international licence fee to provide the “Investors in People” accreditation, which the group also achieved. The third supplier used the funds to purchase land for farming and built a number of tunnels to be used for growing vegetables using hydroponic farming methods. Growing sustainable suppliers and businesses is a vital component of our broader transformation initiatives.

A further commitment of up to R2,0 million was made to the CEO initiative’s SA SME Fund, with an initial contribution of R0,2 million being made during the year.

While the majority of our transformation targets are driven centrally, there is a link to our performance appraisal linked (“PAL”) bonus scheme, creating accountability at an operational level too.

Scorecard element   Weighting   Score
2016/17
 
Ownership   27,00   18,43  
Management control   19,00   11,66  
Skills development   20,00   17,84  
Enterprise development   40,00   26,82  
Socio-economic development   5,00   8,00  
Total B-BBEE score   111,00   82,75  

Ownership
The group currently has an overall black ownership percentage of 21,46%, with 10,85% being held by black women. It is mindful of the impact the winding up of the BEE funding deal may have on this ownership and continues to engage with all the relevant parties in the current structure to minimise a potential decline in black ownership, as the amended codes have set a black ownership target of 30%.

Management control
The employment equity consultative committee meets at least bi-annually to assess progress towards the achievement of quantitative goals, as well as to consider the qualitative elements which may influence the aforesaid achievement of the goals. The committee is representative of all individuals in the company, and is chaired by the divisional director: human resources, appointed as the senior manager responsible for compliance with the Employment Equity Act (“EE Act”), and enjoys the participation of the representative trade union. The lack of a readily available pool of skilled candidates from designated groups at senior and management levels continues to hamper transformation efforts. The group’s ability to develop its own pipeline through succession pools, attendant development and the accelerated development and deployment programme (“ADDP”) will mitigate this to a degree in the medium to long term.

The following comparative table displays the company’s employee profile as at 30 June 2017 and 30 June 2016, for purposes of the EE Act.

            Male             Female         Foreign nationals     Total  
Occupational level   Year   African   Coloured   Indian   White     African   Coloured   Indian   White     M   F        
Top management   2017           1   7     1           1               10  
    2016           1   8     1                           10  
Senior management   2017   5   3       31     2   1       18               60  
    2016   5   3       32     1   1       20               62  
Middle management   2017   4   4   2   19     21   5   2   16         1     74  
    2016   3   3   2   22     18   4   2   18         1     73  
Junior management   2017   41   11   2   19     105   26   2   17         1     224  
    2016   40   12   1   19     102   25   2   18         1     220  
Discretionary decision-making   2017   105   12   3   11     183   27   5   59     2         407  
    2016   101   13   3   14     178   27   6   60     1         403  
Defined decision-making   2017   116   12       4     174   34             1         341  
    2016   118   12       4     177   36       1     3         351  
Total permanent   2017   271   42   8   91     486   93   9   111     3   2     1 116  
2016   267   43   7   99     477   93   10   117     4   2     1 119  
   
Non-permanent*   2017   8   1       2     57   4   1   2     2   2     79  
    2016   21   3       1     51   7   1         1   1     86  
Grand total   2017   279   43   8   93     543   97   10   113     5   4     1 195  
    2016   288   46   7   100     528   100   11   117     5   3     1 205  
* Including 69 experiential learners.

Continuing to make a difference
Over many years, our group has focused on improving the lives of the needy and less fortunate in and around the communities where our hotels operate. This impetus continues through our online beneficiary recipients – Hospice and Food & Trees for Africa – and other organisations which benefit, such as the Cancer Association of South Africa through our Cuppa for CANSA campaign. We also have strong links with the MAD Foundation, the Save the World Foundation, the Sunshine Tour, the JoBerg2c mountain bike challenge and the RAC City Lodge 32km Tough One road race. Over the past year, R4,4 million was donated to various CSI initiatives, with R231 000 being contributed on behalf of our guests to our online charities and a further donation of R200 000 to the Cuppa for CANSA campaign.

 

TO BE A LEADER WITHIN THE HOSPITALITY
SECTOR IN ENVIRONMENTALLY
SUSTAINABLE BUSINESS PRACTICES


As a group, we understand how important it is for our stakeholders that we conduct our business in an environmentally friendly and responsible way. Over the past few years we have developed and implemented policies, practices and targets to reduce and limit our impact on the environment, and continually encourage some of our stakeholders to do the same and to join us on our journey. We continue to actively analyse, manage and monitor these targets and practices throughout all our brands to ensure we operate as environmentally responsibly as reasonably and feasibly possible.

Carbon footprint
Measuring and reporting your carbon footprint has become a globally accepted measure of one’s overall impact on the environment. While this is not the sole indicator of our performance in this area, we are proud of our achievements in reducing our overall impact on our planet since the start of our environmental sustainability journey. We have once again engaged a third-party expert to assist us in assessing our footprint for the year ended 30 June 2017. The scope of this year’s assessment was consistent with last year. The total greenhouse gas (“GHG”) emissions emitted as a result of operational activities amount to 34 321 (2016: 35 936) tonnes of CO2 equivalent (“CO2e”).

The reporting methodology used by Promethium Carbon advisers follows the reporting principles and guidelines provided by three complementary international standards, thereby enhancing the environmental integrity of the carbon footprint.

    2017       2016  
Source of emissions   WBCSD#
scope
    Total CO2e
(t/yr)
    Proportion
of total CO2e
(%)
      Total CO2e
(t/yr)
Proportion
of total CO2e
(%)
 
Premises – LPG consumption   Scope 1     28     0,1       28 0,1  
Premises – Backup diesel generators         108     0,3       89 0,3  
Premises – Refrigerant gas loss         818     2,4       795 2,2  
Premises – Fire extinguishers         63     0,2       40 0,1  
Subtotal         1 017     3,0       952 2,7  
Premises – Electricity consumption   Scope 2     27 444     80,0       29 619 82,4  
Subtotal         27 444     80,0       29 619 82,4  
Upstream activities                            
Premises – Water consumption   Scope 3     822     2,4       901 2,5  
Premises – Waste disposal         464     1,4       498 1,4  
Business travel – Flights         207     0,6       139 0,4  
Business travel – Employee-owned cars         24     0,07       18 0,05  
Downstream activities                            
Fuel and energy-related emissions not included in scope 1 and 2         4 269     12,4       3 730 10,4  
Downstream transportation and distribution         74     0,2       80 0,2  
Subtotal         5 860     17,07       5365 14,95  
Total*         34 321     100       35936 100  
* Errors due to rounding.
# World Business Council for Sustainable Development (“WBCSD”).

Through our ongoing commitment and implementation of resource-efficient technology, we have successfully controlled our GHG emissions and carbon footprint over the past year.

Specific sustainability focus areas
Energy consumption
In our South African operations, we only use electricity generated by the national energy provider Eskom, similarly so in Botswana and Kenya. It is, however, important to our guests that we ensure security of supply, and therefore all hotels have backup diesel generators installed for use during power outages.

The majority of our consumption is as a result of water heating, air-conditioning, lighting and laundry operations, with a total energy consumption for the period of 26,9 million kWh. This contributes towards 80,0% of our carbon footprint and remained a key focus area as a result.

By maintaining a sustainable energy management programme at each of our hotels, we were able to continue our focus on operational and technical efficiencies. In our South African operations, our absolute energy consumption decreased by 3,3%; however, comparative consumption per room night sold only decreased by 0,2% when compared to last year. This is primarily due to decreased occupancies over the period.

Our electricity consumption per occupied and per available room and the resultant per room cost thereof were as follows:

Brand   kWh per 
occupied 
room 
(2016/17)
    kWh per 
occupied 
room 
(2015/16)
  Cost per 
occupied 
room 
(2016/17)
    Cost per 
occupied 
room 
(2015/16)
  kWh per 
available 
room 
(2016/17)
    kWh per 
available 
room 
(2015/16)
  Cost per 
available 
room 
(2016/17)
    Cost per 
available 
room 
(2015/16)
 
Courtyard   30,9     27,5   R51,77     R42,79   14,7     15,6   R24,66     R24,28  
City Lodge   18,7     19,0   R26,60     R24,35   11,9     12,7   R16,97     R16,26  
Town Lodge   17,6     17,7   R31,06     R25,77   9,6     10,2   R17,00     R15,01  
Road Lodge   13,2     12,9   R22,51     R21,15   9,1     9,4   R15,55     R15,37  

Renewable energy
In February 2017, the group commenced with a 12-month pilot project to assess the viability and feasibility of solar power generation at our Road Lodge Centurion. The project has a generating capacity of 50kW, which has thus far proven to be an appropriate size for this hotel’s consumption. The electricity being generated by this system is being closely monitored to evaluate the assumptions used in the feasibility study. These assumptions and findings will then be worked into the evaluation of similar installations at other group hotels in the future.

Water consumption
Reducing water consumption is a joint effort between our hotels and their guests and staff. In designing our hotels, we have reduced the number of rooms with baths in our newer and refurbished City Lodge Hotels to approximately one-third, installed low-flow shower heads and taps and looked at other ways to reduce overall water consumption. A grey water recycling plant has been installed as a pilot project at Road Lodge Pietermaritzburg to treat water expelled from our laundry, which is then used for irrigation purposes. Further such installations will take place during the upcoming year, should this project prove to be viable. Not only is this good for the planet, but as the cost of potable water increases, the savings achieved will contribute to the financial sustainability of the group.

Our guests are encouraged to play their part in saving water by reusing their towels and linen, choosing to shower instead of bath and flushing wisely using the dual-flush toilet systems. We have, in water scarce regions, changed our housekeeping policies for longer staying guests, which has been well received. Reducing the volume of laundry on a daily basis has had a direct impact on the volume of water consumed, and is currently an ongoing area of focus in reducing consumption.

All water for supplying guest rooms and for use in the laundries and kitchens is drawn from municipal supply, with the exception of our Kenyan hotels, where the majority of water is supplied from boreholes. In isolated instances in South Africa, borehole water is used to supplement municipal supply for garden watering purposes.

Total water consumption for the period was 631 494 kilolitres (“kℓ“). This represents a decrease of 62 071 kilolitres (9%) when compared to the prior period, highlighting the group’s efforts to reduce water consumption during the recent drought.

Brand   kℓ per
occupied
room
(2016/17)
    kℓ per
occupied
room
(2015/16)
  Cost per
occupied
room
(2016/17)
    Cost per
occupied
room
(2015/16)
  kℓ per
available
room
(2016/17)
    kℓ per
available
room
(2015/16)
  Cost per
available
room
(2016/17)
    Cost per
available
room
(2015/16)
 
Courtyard   1,09     0,78   R15,65     R16,94   0,52     0,44   R7,45     R9,61  
City Lodge   0,38     0,39   R9,44     R8,34   0,24     0,26   R6,02     R5,57  
Town Lodge   0,36     0,41   R8,68     R11,01   0,20     0,24   R4,75     R6,41  
Road Lodge   0,30     0,34   R5,30     R6,07   0,21     0,25   R3,66     R4,41  

In addition to conserving water, we have a responsibility to manage the quality of water discharged by reducing the consumption and/or controlling the discharge of materials and products that may contaminate water. We achieve this through the use of biodegradable chemicals and products, the installation of grease traps and by using salt water chlorinators to maintain hygiene in our pools.

Waste and recycling
While the volume of solid waste generated by the group is relatively low, given our selected service product offering, we do leverage opportunities which exist to recycle paper, glass, plastics, aluminium and steel cans, and printer cartridges. Hotels in the City Lodge Hotel brand ensure the sorting of waste on premises and the subsequent recycling thereof, with limited waste to landfill being generated. Various recycling options are currently in operation at our other brand hotels. We continue to work on cost-effective solutions to reduce waste to landfill within our remaining hotels.

Compliance
No environmental accidents occurred during the year nor were any environment-related fines imposed the company.

Our goals for the year ahead
In the year ahead we aim to maintain the reduction of energy consumption on a per-room-sold basis. Through our water-saving initiatives we will endeavour to reduce our water consumption on a per-room-sold basis and continue to investigate options around grey water reuse and water conservation in general. Regarding total waste to landfill in hotels where waste data is kept, we will focus on limiting this to below 40% of total waste.

We will continue to investigate the viability of additional photovoltaic solutions and installations for use in selected hotels.

 

TO MAINTAIN AND IMPLEMENT
AN INNOVATIVE TECHNOLOGY
PLATFORM


The group’s investment in technology in prior years has provided a stable platform on which to build. Further investments made over the past year will ensure that, as we extend our operations across the African continent, we are prepared for the increased demand on our IT environment. The group IT function has embarked on various initiatives over the past year, which included the following:

Support of the African expansion programme
The new territory expansion has been a central focus area, to ensure that we are able to deliver the same consistent experience which our guests have enjoyed in the past, while also providing systems that are consistent for our hotel operations.

Having built our own property management system has allowed us the ability to develop and cater for each country’s specific requirements, including the tourism industry regulations and revenue authority specifications.

Our Kenyan operations underwent an upgrade of their IT infrastructure and data centre, to provide additional capacity for the additional operations in the East African region and to introduce upgraded technologies similar to that used in our South African operations. This necessitated the upskilling of our IT professionals in Kenya to further deliver a consistent offering.

New Bid2Stay system
Our highly successful Bid2Stay platform, used as an additional online channel for selling excess inventory over weekends, was upgraded to provide a brand new experience with additional benefits beyond the reduced room rate offered on the previous system. It has also been integrated into our rewards system, allowing members to earn rewards points, while being able to redeem points for a complimentary breakfast or a drink at the bar.

Integration into additional global channels
By developing additional direct connections with larger external channels, as well as our own systems (such as the Bid2Stay system), we have managed to further reduce reservation costs during the year.

Cyber resilience
The recent increase in cyber security attacks globally has raised awareness of potential threats to all organisations, and as we continue to expand, this remains a key focus of the group IT function. Increased user awareness and regular internal and external assessments are performed to confirm the information security posture and ensure improvements are made to align with global practices and regulations.

Leveraging our technologies for the future
As the expansion into Africa remains a focus for the group, the group IT function will continue supporting the growth and will be working on new initiatives that will further enhance the guest experience and introduce efficiencies within our operations.

 

TO CONTINUE EMBEDDING OUR REFRESHED BRANDS
AND REALISE GROWING BENEFITS FROM AN
INDIVIDUAL BRAND MARKETING STRATEGY


Consistency has always been one of the most important hallmarks of the City Lodge Hotel Group. We want our guests to be confident that they will receive the services and enjoy the features and facilities they have come to expect from the brands within our group.

Equally important is brand differentiation, ensuring that our guests know what to expect from the brands they choose. Following on from market disruption research conducted in the previous year, this past year led to the development of specific campaign pay-off or tag lines for each of our major brands, encapsulating and communicating the essential characteristics and appeal of the individual brand.

These are the creative and descriptive pay-off lines developed for above-the-line and below-the-line marketing campaign activities, but also filtering through to online content:

  • Courtyard Hotel – Designed to Impress
  • City Lodge Hotel – There’s Comfort In Every Detail
  • Town Lodge – A Little Extra Can Mean A Lot
  • Road Lodge – Basically Brilliant

These campaign pay-off lines have been used within fresh radio and print advertising creative campaigns that are being strategically focused and implemented within our main target markets. A new print campaign was started for our Courtyard Hotel brand in June 2017 and a new print and radio campaign for our Town Lodge brand began in June and July 2017. New campaigns will also be rolled out for our City Lodge Hotel and Road Lodge brands in the new financial year.

In May 2018, a brand awareness review will be conducted to measure the level of entrenchment of our brands across their target markets. This is also part of our ongoing exercise of tracking brand performance, association and perception.

Just as it is extremely important for our hotels to always be in tip-top shape, subject to regular upgrades and refurbishments, the same applies to our marketing, rewards and booking channels. Our longstanding Lodger Club was upgraded and relaunched as the CLHG Rewards programme in January, along with some additional benefits and features for our regular guests. Our popular Bid2Stay online auction site was also revamped and relaunched in February with extra features and functionality.

With social media being such an important aspect of communication and guest engagement, our social media agency continues to develop our footprint in this vital area of interactive relationshipbuilding and ongoing guest interaction. It is encouraging to note that over our various social media channels, more than 160 000 people are “liking“, “following“ or engaging with us on platforms such as Facebook, Twitter and LinkedIn.

In the sales arena, our group has continued to participate in selected local, regional and international exhibitions, workshops and roadshows aimed at showcasing our hotels. This included events such as Meetings Africa in Johannesburg, World Travel Market in Cape Town and the annual travel industry Indaba in Durban.

Regionally and internationally, our group has in recent months been represented at events in Botswana, Namibia, South America, India, China and Mozambique, with other events in the pipeline over the next few months.

Although we do not actually do anything specifically aimed at winning awards, it is always gratifying when recognition is accredited to our efforts and activities. It reinforces and supports what we are doing behind the scenes and how this is translating into results for our guests.

An encouraging award during the past year was from the Ask Afrika 2017/18 Youth Brands survey for “the coolest brand“ in our category. Hotels.com also recognised some of our hotels during the year, along with 12 TripAdvisor certificates of excellence. Bloomberg ranked us at number 191 in its top 250 companies in Africa and our group was ranked 46th in the 2016 Sunday Times Top 100 Companies supplement which focuses on the JSE’s best long-term performers for shareholders.