More about...Material issues

How we identify material issues:

These material issues remain front of mind in all management decision-making processes:

CHANGING GUEST NEEDS IN THE POST-COVID ENVIRONMENT

The hospitality industry is particularly prone to upheaval when economic conditions change and this is because our guests are particularly affected by change under these conditions. Our board receives regular reports outlining shifts that have occurred in the hospitality landscape, most of which are caused by changes in guest expectations and tastes. In response to prolonged periods of time at home guests are now chasing experiences. After allowing employees to work at home for months, companies are downsizing offices and adopting remote working models, and this has resulted in employees being able to work from almost any location with a WiFi connection. With the option to change their view at a moment's notice, employees are travelling more often, seeking the excitement of leisure activities without compromising on working hours.

Additionally, as millions of companies migrate their operations online, cyber criminals revolutionise methods of invading privacy and holding information to ransom. This not only endangers our guests' information, but the confidential financial and operational information of the group as well.

Our response

Embracing bleisure trends and offering complimentary WiFi

Each of our hotels offer working spaces for guests with our complimentary uncapped WiFi service available to connect them to any colleague, server, website, or software that they may require. We also provide conference rooms with video conferencing facilities available and have hosted product launches, breakfast presentations, video conferences and video events connected to several local and international locations.

Safety and hygiene

Although the Health Minister officially repealed the remaining lockdown regulations on 23 June 2022, we still insist on minimum hygiene and safety standards in each of our hotels. At the start of the pandemic, the group was at the forefront of developing comprehensive safety and hygiene protocols to ensure all guests could be assured of a safe stay and, although guests and staff are no longer mandated to wear masks indoors, the group has stringent, multi-disciplinary measures in place to keep the front- and back-of-house clean and safe, including:

• Strategically placed sanitisation stations in all of our hotels;
• Specialised deep cleaning programmes;
• Individually packaged food service to ensure guests receive their meal with limited risk;
• Linen and towels washed on the hottest wash cycle to kill any potential viral matter;
• Ongoing training to keep our staff informed and well-versed in best practices;
• Accreditation by the World Travel and Tourism Council (WTTC) Safe Travels and the Tourism Business Council of South Africa (TBCSA)

More technology, more security

As the world becomes more technology-based, so do travellers' expectations. Telephone bookings have declined as more of our guests book through our CLHG app, our website, or the third party online travel agencies. Guests communicate with our reception via WhatsApp and can view our food menus, settle their accounts, and review their stay without using any paper.

Room and complementary food offering

Introducing a food and beverage offering at our hotels has enhanced our guest experience, operations, pricing, training, and our bottom line. With lockdown regulations having been lifted, people feel more freedom to socialise and have attended special events in all our hotels, such as wine and food pairings, and some have booked their own special events such as baby showers, birthday parties and weddings. The introduction of our improved menus and the additional training of our staff has allowed us to take advantage of society's willingness to leave their homes and connect with the world around them once again.

FINANCIAL WELLNESS AS WE EMERGE FROM THE PANDEMIC

The overriding strategy during the year under review was one of austerity in spending and optimisation of operational performance. The group carefully monitored occupancy trends in the areas surrounding our hotels and once improvements were seen, we were able to start reopening our last few hotels and running operations more and more as we did pre-Covid.

Our response

Sale of East Africa – availability of cash resources

We concluded the disposal of the East African operations, which included three hotels in Nairobi, Kenya, and one hotel in Dar es Salaam, Tanzania, in June 2022 for a net consideration of R468.6 million. The directors approved the unsolicited offer for the disposal of our East African hotels due to the liquidity challenges brought on by the pandemic. The recovery from the pandemic was expected to take a lot longer in East Africa compared to southern Africa, as the main source markets for travel in this region are from North America and Europe. The ongoing operating costs and further marketing expenses that these hotels required to build the brand recognition in the source markets undermined the original investment and this made the market exit more palatable. The disposal of the East African portfolio improved the group's route to sustainable profitability, enabled the group to settle and refinance its existing debt facilities and made cash resources available for working capital and future refurbishment.

Occupancies and rates growth

Occupancy levels have tracked the easing of lockdown Levels and seen a steady recovery to almost pre-Covid occupancies in the last quarter of the financial year as travel returns and the hospitality sector enjoys renewed activity from all sectors.

The steady improvement in occupancies and demand for hospitality services over the last few months has led to average group occupancies, based on total rooms inventory, of 38% for the year ended 30 June 2022, compared to dire 19% levels in 2021.

We continue to edge toward 2019 pre-Covid occupancies and room rates, and expect to exceed the 2019 levels during the current year.

Liquidity and agility to respond to opportunities

The liquidity provided by the sale, as well as our increased revenue, has enabled the board to consider a wider range of opportunities available to the group, such as:

• Revenue and demand growth from yielding - the application of the BAR methodology across all booking platforms supported by AI for forecasting and understanding market trends help to optimise revenue on each room sold.
• Food and beverage revenue growth - Lunch and dinner menus available across all brands attracting a greater proportion of the guest's purse. Enabling the group to host more leisure events within our restaurants.
• Reinvestment in our hotels
• Make sustainable investments which improve profitability and long-term resilience.
• Investing in our brands Above the line marketing and fresh social media campaigns to grow market share based on new travel behaviours and patterns.