John Keells Hotels PLC. (KHL), one of Sri Lanka’s largest hotel operators owning and managing a portfolio of 1,204 four and five-star rooms in 10 hotels across Sri Lanka and the Maldives saw a decline in both revenue and profitability in the year ended Mar. 31, 2018, with revenue down to Rs. 11.6 billion from the previous year and after-tax profit down to Rs. 1.1 billion from the previous year’s Rs. 1.86 billion.
The company’s chairman, Mr. Susantha Ratnayake, attributed the decline to the complete closure of Bentota Beach by Cinnamon for redevelopment and the partial closure of Cinnamon Dhonveli Maldives and Ellaidhoo Maldives by Cinnamon to facilitate refurbishments.
"The closures resulted in KHL recording a profit before tax of Rs. 1. 35 billion for the financial year ended Mar. 31, 2017, a decline of 40% over the previous year. Excluding the impact of the closures, KHL recorded a satisfactory performance given the increased room supply in the informal and graded sector, particularly in the coastal areas of the country," Ratnayake said.
The company which claims to be Sri Lanka’s hospitality trendsetter commands assets of Rs. 33.2 billion and a net asset value per share of Rs. 18. It posted 81% occupancy in the Sri Lanka sector, up marginally from 80% the previous year, and 82% in the Maldives, down from the previous year’s 89%.
Ratnayake said that Sri Lanka’s tourism sector recorded a subdued 3.2% growth in 2017 to 2.1 million arrivals against the robust 14% in 2016 falling short of the government’s target of 2.5 million arrivals. This was due to three month partial closure of the BIA for renovations and travel advisories from key markets due to floods, dengue and the declaration of a 12-day State of Emergency.
Maldives had recorded 1.39 million tourist arrivals in calendar year 2017, up 8% over the previous year. Arrivals were impacted by the unfavorable political climate in the country resulting in travel advisories being issued from key source markets including China, USA, UK and India. But Russia had recorded a strong recovery in outbound travel to the Maldives growing 33.1% over the previous year with nearly 62,000 arrivals.
Ratnayake said that the redevelopment of 159 rooms and Bentota Beach is ongoing with the hotel due to recommence operations next year. Exceptional expenses at Bentota Beach included an asset write-off and a voluntary retirement scheme expenses.
Looking at the outlook for the future, he said that the government has targeted 2.5 million arrivals this year with traffic from India expected to reach 450,000. The Sri Lanka Tourist Proportion Bureau is focusing on increasing awareness of Sri Lanka as a destination promoting film tourism, destination weddings, MICE (meetings, incentives, conferences and exhibitions) travel and religious and pilgrimage related travel to position Sri Lanka as a ‘destination for all seasons.’
"The group has strong conviction on the long-term growth prospects of the industry and is actively pursuing investment opportunities and partners to expand the Cinnamon hotels portfolio," Ratnayake said.
"The group is conscious of the high asset base of the industry group and in this light, in line with global trends, the group’s future expansion will be executed through asset-light models."
He also announced that they will strengthen their Sri Lanka presence and have made plans to commence construction of Cinnamon Red in Kandy with a room inventory of 210.
JKH with 80.32% of the company, followed by the EPF (5.39%) and the Sri Lanka Insurance Corporation’s Life Fund (4.80%) are the largest shareholders of Keells Hotels. All other shareholders individually own less than one percent.
The share traded at a high of Rs. 11.90 and a low of Rs. 8.30 during the year, closing at Rs. 9.30. This compared to a trading range of Rs. 13.50 to Rs. 9.80 closing at Rs. 10 the previous year.
The directors of the company are Messrs. SC Ratnayake (chairman), KNJ Balendra, JGA Cooray, JR Guneratne, JEP Kehelpannala. BJSM Senanayake, NB Weerasekera and Ms. AK Moonesinghe.
Ratnayake said that Sri Lanka’s tourism sector recorded a subdued 3.2% growth in 2017 to 2.1 million arrivals against the robust 14% in 2016 falling short of the government’s target of 2.5 million arrivals. This was due to three month partial closure of the BIA for renovations and travel advisories from key markets due to floods, dengue and the declaration of a 12-day State of Emergency.
Maldives had recorded 1.39 million tourist arrivals in calendar year 2017, up 8% over the previous year. Arrivals were impacted by the unfavorable political climate in the country resulting in travel advisories being issued from key source markets including China, USA, UK and India. But Russia had recorded a strong recovery in outbound travel to the Maldives growing 33.1% over the previous year with nearly 62,000 arrivals.
Ratnayake said that the redevelopment of 159 rooms and Bentota Beach is ongoing with the hotel due to recommence operations next year. Exceptional expenses at Bentota Beach included an asset write-off and a voluntary retirement scheme expenses.
Looking at the outlook for the future, he said that the government has targeted 2.5 million arrivals this year with traffic from India expected to reach 450,000. The Sri Lanka Tourist Proportion Bureau is focusing on increasing awareness of Sri Lanka as a destination promoting film tourism, destination weddings, MICE (meetings, incentives, conferences and exhibitions) travel and religious and pilgrimage related travel to position Sri Lanka as a ‘destination for all seasons.’
"The group has strong conviction on the long-term growth prospects of the industry and is actively pursuing investment opportunities and partners to expand the Cinnamon hotels portfolio," Ratnayake said.
"The group is conscious of the high asset base of the industry group and in this light, in line with global trends, the group’s future expansion will be executed through asset-light models."
He also announced that they will strengthen their Sri Lanka presence and have made plans to commence construction of Cinnamon Red in Kandy with a room inventory of 210.
JKH with 80.32% of the company, followed by the EPF (5.39%) and the Sri Lanka Insurance Corporation’s Life Fund (4.80%) are the largest shareholders of Keells Hotels. All other shareholders individually own less than one percent.
The share traded at a high of Rs. 11.90 and a low of Rs. 8.30 during the year, closing at Rs. 9.30. This compared to a trading range of Rs. 13.50 to Rs. 9.80 closing at Rs. 10 the previous year.
The directors of the company are Messrs. SC Ratnayake (chairman), KNJ Balendra, JGA Cooray, JR Guneratne, JEP Kehelpannala. BJSM Senanayake, NB Weerasekera and Ms. AK Moonesinghe.
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