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Our strategy in practice

BRAND IDENTITY

Opening Courtyard Hotel Waterfall City

The new Courtyard Hotel Waterfall City had been on the cards for some time. Symbolically, opening the 168-room hotel in March 2021, amid a pandemic demonstrates hope for the future and confidence in CLHG's ability to weather Covid-19.

Practically, the new hotel showcases the direction of the Courtyard Hotel brand, with new design elements, a Green Star 4-star Custom Design certified rating from the Green Building Council South Africa and additional services. It is located in Waterfall, an up and coming 'digital city' close to Gauteng's major traffic arteries and the Mall of Africa. This hotel features all CLHG's innovations, including online check-in and QR codes for Covid-19 testing, and new bespoke food and beverage offerings from Executive Chef Keegan Maistry and his brigade of chefs. The Protea Restaurant on the ground floor serves a sophisticated, contemporary breakfast, lunch and dinner while The Highline Restaurant on the ninth floor specialises in gourmet light meals for lunch and dinner.

The hotel targets both business and leisure visitors, as well as 'bleisure' guests making the most of their business stay.

Enhancing our food and beverage offering

Refreshing our menus

With the increased demand for guests to stay indoors, as well as an increase in business from the leisure travel market with different nutritional needs, food and beverage has become a stronger focus area for CLHG, both as a way to improve the guest experience and as an enhanced revenue stream.

A major milestone in our journey towards an improved food and beverage experience was the appointment of Trevor Boyd, an executive chef with 25 years' experience in the industry, as General Manager: Operations for Food and Beverage. Trevor will help to take #Cafe to a new level, while introducing new menus at our hotels. The Town Lodge and Road Lodge brands, which traditionally offered breakfast only, are having their menus expanded to ensure guests staying at these hotels have the choice to order meals from the hotels' menus.

Our breakfast offerings needed to be reviewed in light of the Covid-19 safety measures. In different territories, this particular offering impacts the guest experience differently. For some guests, the breakfast buffet is an indispensable perk. Similarly, our lunches and dinners for the City Lodge Hotel brand can be expanded from relatively standard menus to new offerings that take dietary requirements and guests' meal preferences into account, while still retaining old favourites.

We also introduced gourmet pizzas baked to order in our kitchens across all our brands, and refreshed the bar snack menus at our Town Lodges, Courtyard Hotels and City Lodge Hotels. New menus are first piloted at a few hotels to ensure that they align with guest tastes.

Promotional events and cateringPromotional events and catering

To help guests understand that CLHG offers more than just breakfast, we introduced several campaigns focused around special events and public holidays, with menus catering specifically for those events.

Promotions play an important role in our organic growth strategy by attracting guests who are not familiar with our hotels. The overarching message is that CLHG is open, hygienic and safe for any occasion, whether business or leisure. Through our partnerships and the expertise at our hotels, we can offer an end-to-end catering service for special events, whether baby showers or business lunches. Our local partners enrich these experiences by, for example, providing a gourmet cake as a prize for Mother's Day events or craft beer to accompany hearty dishes for Father's Day.

Sales and marketing initiatives

CLHG's marketing strategy is designed to drive loyalty and community while meeting specific operational needs. Each brand's marketing team applies data analytics to support the marketing strategy of their hotels.
The cash flow constraints that followed the temporary suspension of services of most of our hotels meant that much of our paid advertising was suspended. Digital platforms and social media have been the group's primary communication channels for providing guests, customers and members with current information on various group hotels and distinct brand experiences.

The group continued communicating with the media and senior management participated in numerous industry-specific webinars and online events, as well as a broad range of local and, on occasion, international print, digital, radio and television interviews. Maintaining a consistent media profile as a credible and popular choice to comment on key industry issues and current affairs is an important communications objective. The CLHG loyalty programme and digital platforms are also key components of building loyalty and driving revenue. Our loyalty programme deepens relationships with members to drive repeat stays through tailored services and experiences for regular guests. We are planning to implement a reinvigorated loyalty programme offering that leverages our recently developed mobile app.

During the year, specials and promotional events helped to improve brand awareness and attract guests. We are proud to have attained several awards during this time, as listed in Sustainability review.

Driving online bookings

Direct bookings through our website enable the group to offer our guests better rates, while improving our own margins. The following online booking platforms also extend our reach:

  • Booking.com
  • LekkeSlaap.co.za
  • Expedia.com
  • Agoda.com
  • Safarinow.com.

All online bookings were constrained by the pandemic as demand dropped.

CONSOLIDATION

Repositioning underperforming hotels

The lull in occupancies that followed the pandemic provided an opportunity to critically evaluate each hotel's performance. Underperforming hotels came under scrutiny by the CLHG new turnaround strategy sub-committee.

Two hotels, in particular, were found to be misaligned to the clientele for the areas in which they were located. Their branding did not make them competitive from a pricing point of view, especially in areas with an over-supply of competitors in that class. Accordingly, Courtyard Hotel Eastgate was rebranded to City Lodge Hotel Eastgate, while Town Lodge Sandton, Grayston Drive became Road Lodge Sandton. These properties now offer customers similar luxury at a more affordable price, with a brand that may be familiar to more guests in those markets.

Unfortunately, both rebranded hotels had scarcely opened when stricter lockdown measures forced them to close again. Time will tell how successful this rebranding exercise will be.

Disposal of clhg's East African hotels

Although we are optimistic that southern Africa's markets will return to profitability soon, the East African hospitality sector, in particular, relies on international business travel, which will potentially take longer to recover. The group accepted an offer for the disposal of our entire shareholding in East Africa operations, which includes four hotels in East Africa. The proceeds from the sale will be used to partially settle outstanding debt, which injects liquidity into working capital and allows the group to resume the maintenance capital cycle at our hotels.

TRANSFORMATION

B-BBEE

Given the vast numbers of employment opportunities created by the hotel industry, transformation plays a vital role in developing our societies. Although transformation and empowerment targets for the hotel industry are higher than for many others, compliance has never been our main goal. We see it as a moral imperative to make a real and lasting difference to the lives and futures of our employees, industry and operating countries. We also recognise that transformation is a business imperative. Our staff demographic should match those of our guests.

Therefore, the group is transforming itself in line with how our markets are changing. We have had no gender or race-based income disparity in our organisation since we launched in 1985. CLHG is committed to equal opportunities and advancing opportunities for women in our business and the hotel industry as a whole. As a result, more than 40% of our general managers today are women and that number is growing.

At the time of publication, the current year B-BBEE verification was in the advanced stages of the audit. The prior year scorecard rating of 90.45, which matured in September 2021, secured a B-BBEE level 4 rating.

However, following the acquisition of a 99.99% share in the B-BBEE entities in December 2020, we do not derive the same level of equity ownership benefits for the B-BBEE scorecard. We are exploring optimising our share register credentials to regain our equity ownership in the medium term. Our transformation committee, chaired by the COO, meets regularly to plan and monitor transformation strategy and plans in CLHG.

Training and talent development

A major part of transformation across the group is the training and development of future executives across all race and gender groups, ensuring that we have a well-established succession plan and a deep pool of leadership talent to facilitate our continued brand and market share growth. As part of our commitment to an inclusive culture and environment, we encourage and welcome innovation and input from our staff.

While the cash flow constraints of the past financial year, paired with the adjustments of working in a Covid-19 environment, limited the group's skills development initiatives somewhat, skills development remained a priority. The group is introducing more learnership opportunities and increasing training programmes. We currently have 76 employees registered on various City & Guilds courses, as well as 90 hotel school students gaining work experience at our hotels. During this period, the group offered learnership opportunities to 10 disabled or unemployed learners, in partnership with the South African Disability Development Trust.

We are particularly proud of our management development programme, which identifies black talent and ensures that people of colour are considered for promotions. Our Management Development and Succession Committee (Mandasco), chaired by the CEO, also tracks the success of the accelerated development and deployment programme (ADDP) for young, Black staff members.

The opening of Courtyard Hotel Waterfall City marks a further shift in our approach to transformation. It is both an opportunity to showcase diversity at all levels of management and operations and to identify new talent, while providing an advanced training ground for employee development.

Societal transformation

Our sustainability as a business is wholly dependent on the sustainability of the societies and environments in which we operate. Healthy, thriving societies underpin healthy, thriving businesses.

Much of our societal support takes the form of targeted social investment focused on the initiatives and people who can be realistically enabled to prosper and grow. We prioritise enterprise development and work closely with our suppliers to ensure a positive impact on the transformation of our entire supply chain.

Our social beneficiaries presently include a training provider, a furniture manufacturer, a transport provider and a fresh food supplier. These beneficiaries not only receive financial support and business guidance from us but have also become part of the group's supply chain.

CSI

Our social investment initiatives also contribute to transformation. While the pandemic restricted the number of activities the group would normally engage in, the hotel general managers prioritised community engagement.

Emthonjeni Community Centre is dedicated to community upliftment of those in need, especially benefiting the impoverished community in Zandspruit in Gauteng, South Africa. Our Emthonjeni partnership saw a large consignment of used but functional stock from the group's hotels in Sandton, West Rand and CBD, as well as new bottles of body lotion, being handed over in May 2021 for the centre to reuse, recycle or upcycle.

Solar energy

In December 2019, we completed 25 solar energy installations at a total investment of approximately R20 million. The goal was for each installation to generate 30% of their hotel's total energy, lowering the group's overall energy consumption from non-renewable sources by approximately 10%. With the low occupancy rates during the pandemic, we have not yet seen the benefit of the solar panels. However, as demand increases and the technology becomes more efficient and cost-effective, more of our hotels will be converted to solar.

In the year ahead, we aim to maintain and, where possible, further reduce energy consumption on a per-room-sold basis.

Reduced single-use plastic usage

We are driven to eliminate single-use plastics throughout our operations. By introducing water filter stations that provide both still and sparkling magnesium-enriched water to our guests at no cost we reduced the need for bottled water at our hotels.

Our guests are pleased with the group's new range of environmentally-friendly bathroom amenities, which include the Zero shampoo bar, developed together with our South African supplier, The Bespoke Amenities Company (TBAC). These products come in recyclable cardboard packaging that is certified by the Forest Stewardship Council.

As occupancies increase from current Covid-19 levels, we will prioritise initiatives for managing and reducing waste.

The Guest 2.0 Experience

To take our guests' experience to a new level, we analysed each step of the guest journey to determine how we can streamline and improve the guest experience. The group has already implemented several improvements and continues exploring ways of improving.

We were particularly thrilled by the new version of our City Lodge mobile application. This application features increased functionality, including an option for online guest check-in so that guests can simply collect their key card on arrival. It also provides information about room service, food menus and local attractions.

Continuing from the previous financial year, we reduced physical touchpoints even further to protect our guests and employees. Online forms and QR codes replace traditionally paper-based solutions. At some of our hotels, guests can even use their mobile phones to open their hotel room doors and switch on the television. They can also contact the hotel via WhatsApp.

While some of the Guest 2.0 enhancements had to be put on hold because of financial and operational constraints, CLHG will continue exploring ways to improve the guest experience.

Boosting our operational performance

Many of our central office employees are still working remotely, with the necessary IT tools in place to support productivity and efficiency while at the same time reducing costs on office operating consumables and services.

Revenue growth and management remain key focus areas. Our Best Available Rate (BAR) initiative, which went live in June 2021, considers market trends and demands for accommodation to calculate the best rates for our guests, rather than applying a single rate philosophy. This benefits our guests by providing them with more competitively priced accommodation at all times, while optimising revenue yields for the group.

For this purpose, we are leveraging predictive analytics and machine learning to inform our pricing decisions. Our new BI tool helps to analyse key clients, track new business and personalise offerings for guests, corporate clients and agents. It also assists in gauging the success of CLHG marketing initiatives.

We are trialling the new BI tool at 25 hotels. The tool uses machine learning based on historical, environmental and, macro- and micro-economic information. Considering the unusual conditions brought on by the pandemic, the AI tool is still learning to understand the operating environment. However, it provides hotel managers with valuable insights into potential peaks or troughs in demand, helping them to determine the BAR.

The shift to BAR required a corporate culture change, especially among the group's general managers. Previously, they would run operations according to the rates provided by the central office, but they are now empowered to adjust rates in response to demand forecasts and market conditions. This new process requires extensive training and change management, but both the general managers and the group have been encouraged by the resultant growth in revenue.

Cyber security

Data security and cyber threats are high on the global agenda, following data breaches at high-profile companies. CLHG maintains industry standard security features, accompanied by group-wide cyber security awareness programmes.

On 1 July 2021, the POPI Act came into effect. In the interest of our guests' privacy, CLHG ensures that it complies with every aspect of the Act.

LOOKING AHEAD

The group's strategy in the year to come will be a continuation of existing initiatives while CLHG navigates the pandemic and returns to profitability:

  • Adapt the group's business model to retain profitability, initially by pursuing enhanced food and beverage opportunities, retail opportunities and on-site power generation
  • Embrace technology across the group to increase revenue and lower operating and other costs. Specific programmes include:
    • the addition of new local and international online booking channels
    • leveraging our in-house property management system for further technological advancement
    • relaunching the loyalty programme and expanding our strategic partnerships
    • utilising AI to improve demand prediction and inform pricing strategy
  • Enhance the group's brands to gain market share from smaller, independent competitors
  • Continue refurbishing and modernising the group's hotels
  • Consider opportunities to acquire distressed competitor assets without placing further pressure on the group's working capital requirements.