Trans Asia Hotels Limited is investing Rs.500 million in repairing damage caused by the recent LTTE air attack targeting the Sri Lanka Air Force Headquarters and upgrading its lakeside property to a superior status, the company announced on Friday.

Mr. Ajit Gunawardena, Deputy Chairman of John Keells Holdings which is the ultimate owning company of Trans Asia, said that an insurance claim of Rs.150 million for property damage caused in the air attack had been finalized by the company which was spending much more on a full upgrade of the property to be re-branded and launched as Cinnamon Lakeside, Colombo.

The hotel will be closed for a three-and-half month period commencing on May 15 to carry out the refurbishment and repair, the owning company announced.

"The hotel’s lobby, lobby lounge, coffee shop, main ballroom, bedrooms, outdoor terrace and pool area will see a significant revamp," the owners said in a news release.

Singapore based Brent Severin Associates Pte. Ltd, will do the architectural and design work while the local architects/designers will be Design Pvt. Ltd. and Taru Pvt. Ltd. with LAN Management as project managers.

Well informed sources said that in addition to the property damage, a business interruption insurance claim has also been finalized with the insurers, Hayleys AIG.

These sources said that the total insurance settlement will be running at around Rs.300 million.

An analyst noted that the JKH group is upbeat about prospects for Sri Lanka tourism industry and this has been demonstrated by its willingness to seize the opportunity of the damage caused to the hotel to invest in upgrading it to a level higher than before.

``Trans Asia was to be re-branded as a Cinnamon property but the refurbishing and upgrading this entailed had come quicker than expected as a result of the damage caused by the air attack,’’ he said.

The hotel announced the three and a half month closure, considered to be the most efficient way of quickly completing the work and having the hotel fully operational, to its staff who will be on full salary and also be paid Rs. 8,000 per month to cover service charge earnings they will lose, shortly before the public announcement.

The Trans Asia has 339 rooms of which 100 were damaged due to the air attack although the hotel took no direct hit. Much of the damage to bedrooms involved blown window panes and shattered glass although the ballroom where wall panels, mirrors and chandeliers were destroyed took a major hit.

There was also damage to staff quarters on the Inland Revenue Department side of the building. The LTTE light aircraft carrying a heavy explosive charge crashed landed into an upper floor of the Inland Revenue building.