Where did the million tourists stay? Not in star properties

Pegasus chairman outlines pluses and minuses in big picture


Although Sri Lanka had registered the arrival of one million tourists last year, the impact of this traffic had not been felt by the star class properties in the country, Mr. D.C.R. Gunawardena, Chairman of Pegasus Hotels of Ceylon PLC has said in the company’s recently published annual report.

"It is therefore prudent to surmise that this influx of tourists have patronized the bungalows, guest houses and residences of relatives as their preferred abode as opposed to regular hotels," he said

"Whilst this casts doubt on the classification of "tourist", it certainly displays the lower spending potential of tourists which doesn’t auger well for the industry as a whole."

He has drawn attention to what he called ongoing "mass scale credit card promotions" offering steep discounts for top class properties. This pointed to the hotels needing "local filler clientele" to utilize capacity with fewer foreign guests than expected.

"All this points out that Sri Lanka is yet to become more adept at packaging and directing its tourism offering attractively," he said

Gunawardena said that although the big picture indicated many positives, the reality was that the hotel industry continued to face challenges such as the dearth of trained staff, price wars, lack of rooms, inconsistent service standards and inadequate marketing efforts in foreign markets.

He identified the upside to include rapid development of road networks complementing the tourism product and encouraging other tourism supplementary byproducts.

Expressways, he said, will make long traveling time shorter and comfortable and even remote locations which hitherto would have been off the tourism menu now being offered making the options sweeter.

"Also, efforts taken by the authorities to develop Colombo city and suburban infrastructure, beautification and ensuring cleanliness are to be lauded as tourism friendly initiatives which will further complement the tourism product," he said.

The year under review had seen Pegasus which calls itself "a city resort" posting a group revenue of Rs.493.2 million, up from Rs.426 million a year earlier and a profit after-tax of Rs.142 million against the previous year’s Rs.120.7 million.

At company level revenue was up to Rs.397.3 million from Rs.335.6 million a year earlier and the profit after-tax to Rs.123.8 million from Rs.99.8 million.

Group profits translated to an earnings per share of Rs.4.68, up from Rs.4.39 a year earlier. The directors have recommended a dividend of 50 cents per share with the Chairman saying that although the bulk of capital expenditure was behind them, they needed to be ready to face the challenges ahead.

The company has invested heavily in ongoing refurbishment including a purpose built grand banquet hall to accommodate 700 plus guests. This is expected to "catapult the hotel into the big league for hosting large weddings and corporate events," Gunawardena said.

Pegasus has a stated capital of Rs.515.2 million, group capital reserves of Rs.675.1 million and revenue reserves of Rs.152.4 million in its books. Total assets are running at Rs.1.5 billion and liabilities at Rs.162.9 million.

Net assets per share had grown to Rs.44.18 from Rs.40.40 a year earlier with the share trading at a high of Rs.54.50 and a low of Rs.29 during the year under review against a trading range of Rs.83 to Rs.35 the previous year.

Carsons Cumberbatch & Company is the dominant shareholder with 93.09% of the company with all other investors individually owning less than one percent of the share capital.

The directors of the company are: Messrs. D.C.R. Gunawardena (Chairman), Mano Selvanathan, Hari Selvanathan, Sega Nagendra and P. M. Withana.

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