Ongoing refurbishing hurt Hilton profits


Mr. K.P. Cooray (chairman)

Hotel Developers (Lanka) PLC (HDL), the owners of the Colombo Hilton, now fully owned by the government has seen an earning downturn attributable to ongoing refurbishment in the nine months ended Dec. 31, 2015, when the after-tax profit declined to Rs. 26.6 million from Rs. 122.6 million a year earlier.

This was despite the average room rate growing to Rs. 20,326 from Rs. 18,588 during the comparative period the previous year. Occupancy was down to 38% from 43% a year earlier.

HDL has changed its accounting year, previously ending Mar. 31, to the calendar year to coincide with the Hilton accounting period and hence the 2015 results have been presented for a nine month period.

The company’s Chairman, Mr. Krishantha Cooray, has expressed confidence in the HDL report that the Colombo Hilton will "stay ahead of the curve upon completion of refurbishment despite the rising tide of competition in the city hotel segment."

He said that sentiment remained largely positive for 2016 though at a slightly lower level against the previous two years. Based on the current trend and outlook, the UN’s World Tourism Organization expects international tourist arrivals to grow 4% worldwide in 2016.

Sri Lanka had seen sustained growth in tourist arrivals during the period under review with from non-traditional markets in South East Asia supported by promotional campaigns undertaken by the country as part of the national tourism development strategy.

Higher inflows from South East Asia offset declines of arrivals from the traditional European markets. Arrivals from China, India, East Europe, UK, Japan and Germany were the key contributors to the upsurge in arrivals with China the biggest contributor, Cooray said.

In a management discussion and analysis, the HDL report said that despite the disruptions caused by the ongoing refurbishing, their operational performance was strong. The results for 2015 covered only nine months due to the change in the accounting year.

"Due to the ongoing refurbishment only 80% of our rooms were in operation during the year," the report said. "The available room capacity was further reduced due to the need to accommodate our tenants, mainly offices and shops, in the available rooms. The temporary accommodation arrangements, until such time as the retail space is refurbished, resulted in reducing the number of room keys for the period."

Apart from the effect of the refurbishing disruption, the interest rate dip depressed investment income from Rs. 95 million to Rs. 42 million and with food and beverage space reduced, F&B revenue too was down to Rs. 797 million from Rs. 932 million a year earlier.

"On the conclusion of the renovations, the Hilton Colombo will stand out as the crowning glory of Colombo city with plush art decor floorings, fittings and fixtures, coupled with state of the art facilities and modern technology to reflect the premium standards associated with the Hilton brand internationally," the report said.

"Overall, we envisage positive growth potential for tourism and we are gearing up to seize opportunities as they emerge," it added.

HDL has a stated capital of Rs. 20.467 billion and total assets of Rs. 14.77 billion. Total liabilities are Rs. 1.135 billion.

The directors of the company are: Messrs. K.P. Cooray (chairman), Ms. Dheeshana Ameresekere, Padma Maharaja, J.M.U.P. Jayamaha, Athula Senanayake, Ms. Tejhani Mathew, Dinouk Colombage, M. Shezmin Mansoor, W.S.L.A.D.R. Samarasinghe and Ms. Sonali Liyanamana.



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