John Keells Hotels PLC posted its second consecutive loss in two years with a negative Rs.221 million on its bottom line during the year ended March 31, 2009, nearly three times the previous year’s loss of Rs.71.1 million.

The company however was upbeat about future prospects saying it is strongly positioned both in Sri Lanka and the Maldive Islands "which remains two of the world’s most attractive travel destinations – giving us the confidence to anticipate excellent results in the year ahead."

The company’s Chairman, Mr. Susantha Ratnayake, said in the annual report of the company that despite the bleak industry conditions, the group had achieved revenue of Rs.5.1 billion which was similar to the previous year with revenue from the Maldives helping to catch the lag in Sri Lanka.

He said that they had succeeded in reducing 39% of the heavy finance cost primarily due to the reduction in debt following a rights issue last year and lower rates on overseas borrowings structured on favourable rates.

The company said it has a vision to own or manage 10,000 hotel rooms in South Asia and other destinations of potential. It hoped to have a million satisfied customers by 2014, the report said.

Ratnayake said several investment opportunities in emerging leisure destinations in the region were evaluated during the year though none crystallized as they did not meet the company’s return expectations.

"The extreme volatility in the global financial and capital markets as well as its lagged impact on the tourism industry during the latter part of the year necessitated greater discipline and prudence in evaluating projects," he noted.

"However, alert to the emergence of potential opportunities in the wake of the global industry downturn, we continue to explore all such prospects in keeping with our strategy of expanding our presence in the region."

Ratnayake was confident about a dramatic turnaround in tourist arrivals with peace and stability reestablished.

"The country is likely to see a dramatic turnaround in tourist arrivals, if augmented by a concerted destination marketing effort," he said.

However the Maldivian Ministry of Finance and Treasury anticipate a drop in country occupancy there this year owing to the increase in bed capacity and the downturn in arrivals.

Occupancy of Keells Hotels in Sri Lanka during the year under review was down to 39% from the previous year’s 44% while occupancy in the Maldives dipped to 72% from 77% a year earlier. Total occupancy in the company’s resorts at 51% (439,085 guest nights) was down from 56% the previous year when 452,914 guest nights were recorded.

The John Keells Hotels resort portfolio in Sri Lanka includes the Cinnamon Lodge at Habarana, Chaaya Village, also at Habarana, Chaaya Citadel, Kandy, Bentota Beach, Yala Village, Coral Gardens at Hikkaduwa and Club Oceanic at Trincomalee.

In the Maldives the company operates four resort islands, one carrying the Cinnamon brand and the others the Chaaya brand.

John Keells Holdings PLC with 92.69% of the company’s equity is the dominant controlling shareholder with no other shareholders owning one percent.

The Keells Hotel one-rupee share traded at a high of Rs.7.75 and a low of Rs.5.25 during the year under review against a trading range of Rs.10.25 to Rs.5.25 the previous year.

John Keells Hotels has a stated capital of Rs.5.86 billion, capital reserves of Rs.620.8 million and revenue reserves of Rs.696 million. Interest bearing borrowings of Rs.3.2 billion and bank overdrafts of Rs.2.4 billion are carried on the company’s balance sheet.