March 13, 2017

City Lodge Hotels Group Expands in Africa but Avoids Nigeria

Dolapo Omidire

City Lodge Hotels Group, a Southern African hotel company, intends on spending 1 billion rand ($77 million) on further expansion as it seeks to cater for both the business and tourist markets across the African continent. The group is targeting capitals within the expanding economies in East Africa and consolidating its presence in southern Africa. The group however, plans on avoiding Nigeria for now, where it previously suffered setbacks.

The business environment in Nigeria has become increasingly difficult as a depreciating currency, limited access to FX and rising inflation have eroded value and pushed the cost of doing business higher. Late last year, Tourist Company of Nigeria, owners of the Federal Palace Hotel, reported a loss of N5.6bn for the financial year ending June 2016, up from a N2.3bn loss in the preceding year. Among many other issues, the increased costs the Hotel faced during the period could not be passed on to customers as a result of the increasing supply and competition from other hotels.

Speaking with Reuters, Chief Executive Clifford Ross:

“The strategy is to go into a number of the major East African capitals to start off with, and then the longer-term strategy is to find other opportunities for other brands within the group within these countries…”

City Lodge currently has two hotels in Nairobi, Kenya and another 172-key hotel under development. The group also has projects under development in Tanzania, Mozambique and Namibia but are also keeping Uganda on their radar.

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