Aitken Spence eyeing Middle East hotels

The Aitken Spence Group is perhaps a good example of how an innovative Sri Lankan company has turned a crisis into an opportunity – exporting its skills in hotel management and the leisure industry to India, the Andaman and Nicobar Islands and now the Middle East.

Currently the group has eight hotel properties lined up for management and part equity in India, some of which are already operating under Aitken Spence management while 2-3 hotels in the Middle East would also soon come under its wing. One particular property in India, an old British Club in Madurai, which saw the involvement of ace Sri Lankan architect, the last Geoffrey Bawa, now finds his student and fully-fledged architect, Vinod Jayasinghe overseeing a revamp of the property. Spence hotel’s Indian operation would soon be as big or bigger that the Sri Lankan operation (8 hotels) and a standalone unit itself. Malin Hapugoda, Managing Director of Aitken Spence Hotel Managements, who is driving this new development, says outside India, the Middle East offers a whole range of opportunities and possibilities. “We are strongly looking at the Middle East as an investment opportunity. We might have something very soon – again on management which will provide a lot of opportunities for Sri Lankan workers.

We are looking at a couple of hotels owned by a company to take over management. These are running hotels which we will revamp,” he said in an interview with The Sunday Times FT, expressing a lot of hope and optimism about the exciting phase of development that lies ahead.

Aitken Spence was the first Sri Lankan group to venture into hotels in the Maldives in the 1980s. Likewise it is the first Sri Lankan group to set up in India, the Nicobar Islands and the Middle East.

To prepare for a sizable number of Sri Lankans who would be seeking to work overseas in the hotel industry, the company has said up its own fully, fledged labour recruitment agency, Aitken Spence Resources which recruits staff for its own hotels abroad and others.

The hotel school set up in Ahungala with an NGO as a CSR project by the company is specifically for the purpose of ensuring a steady reservoir of staff as and when the experienced hands serve a term overseas. “They can work in our hotels and come back (with some money) with more experience and be absorbed by our group,” he said.

He said the Middle East is an exciting place to be right now as its attractiveness for Indian workers is slowly diminishing. An economic boom in Sri Lanka’s closest neighbour has led to wage levels, either close to or higher than the Middle East. “There is a huge opening for Sri Lankans there,” he said.

Aitken Spence’s success in securing management contracts in India stems from the recent successful branding of its three flagship hotels – Kandalama, Triton and the Tea Factory. Under a strategy aimed at maximizing the value these properties have brought in terms of environmental awards and other achievements, the three hotels have been chained together under the Heritance umbrella and renamed Heritance Kandalama and Heritance Ahungalla with Heritance Tea Factory to be branded sometime this year, if funds permit the necessary refurbishment.

The success of this change drew the interest of Indian investors seeking to enter the hotel business there. “They were interested in our model of developing properties where the hotel reflects the local culture, flavour and anything indigenous to that region while maintaining the common base of high class service under a clean environment. Each property reflects the culture of that location,” he said.

Aitken Spence competed with the likes of Oberoi and the Taj Group in securing the management contracts but the Heritance model was what convinced the Indian companies most to go with the Sri Lankan firm.

The group will be (or already is) managing four hotels in New Delhi, the British Club on a 17-acre block at Madurai, a 25-acre property in Trivandrum (inclusive of 15 percent equity), a 20-acre boutique hotel in the backwaters of Cochin and a unique boutique hotel in the Andaman and Nicobar islands on one of the best beaches in Asia (with 20 percent equity). Two of the properties in India will carry the Heritance brand; Heritance –Cochin and Heritance –Madurai.

Hapugoda said the investments have the approvals of the Central Bank and the Board of Investment in which all the profits have to be repatriated to Sri Lanka. The BOI involvement has helped to speed up the process since the Central Bank is slow in approving foreign investments for Sri Lankan companies. The Indian properties managed by Aitken Spence will have Sri Lankan CEOs, chefs and chief engineers but not other categories of staff from here.