Chamwe Kaira
City Lodge Hotels has written down N$13.5 million in Namibia after new tax rules restricted how companies can carry forward assessed losses.
The changes, communicated by the Namibia Revenue Agency (NamRA) in September 2024 and from 1 July 2024, losses can only be set off against taxable income to N$1 million or 80% of taxable income, whichever is higher. Losses may also not be carried forward for beyond five years.
“In light of these changes, a N$13.5 million impairment has been recognised,” the group said in its financial statements for the year ended 30 June.
In the prior year, City Lodge reversed a N$20 million impairment loss in its Namibian subsidiary, citing improved performance and the capitalisation of an intercompany loan by its holding company, City Lodge Hotels (Africa) Proprietary Limited.
“It was estimated, prior to new tax legislation in September 2024, that there would be sufficient taxable income in the medium term against which the deductible temporary differences could be used,” the group explained.
The hotel group also faced challenges from geopolitical uncertainty, which weighed on occupancy rates across Southern Africa. Rising utility costs and property expenses added to the pressure, reflecting higher tariffs and energy reliability concerns.
Despite this, profit for the year rose 13% to N$213 million, while revenue increased 3% to N$2 billion. Group occupancy declined to 56% from 58%, with about 2% of total rooms out of circulation due to refurbishments at eight hotels.
City Lodge said solar power is now installed at 41 hotels, cutting diesel use, although property costs climbed 13.1% to N$181.6 million.
Food and beverage operations improved, with gross profit margins rising to 62% from 60%. Adjusted headline earnings per share grew 9% to 34.6 cents.
Looking ahead, the group has authorised N$296.6 million for capital projects in 2026, including refurbishments, new solar and water sustainability solutions, and technology upgrades.
It expects improved economic conditions in Southern Africa, supported by expected interest rate cuts and upcoming events such as the G20 summit.
City Lodge opened its 147-room Town Lodge Windhoek in 2017 as part of a N$1 billion expansion into Africa launched in 2015.
The development was based on a land and building lease, with capital costs for fittings between N$35 million and N$45 million. The Windhoek property became the group’s 13th Town Lodge and its 58th hotel overall.
The group also operates the Fairview Hotel, Courtyard Hotel, City Lodge Hotel, and Road Lodge brands.
