Hemas mulls city hotel, regional strategy and hotel management
Hemas Holdings PLC is exploring the idea of a city hotel and has made inroads in its regional expansion, while eyeing hotel management opportunities in and out of Sri Lanka.
“The leisure industry is in a good position now. It’ll grow and it’s a core part of our business. In this context we’re looking at a Colombo hotel. The challenge is to have a city hotel because with tourism going forward (with Chinese and Indian tourists) those who want to stay and spend (time) in the city need to be serviced,” Steven Enderby, CEO Hemas Holdings PLC told the Business Times. He added that cottoning on to a city hotel is all about considering the right timing and this is also the tricky part. “Hotels aren’t cheap and their return on investments is challenging. Timing is the most important factor and we have got to keep it (the city hotel) on the top of our mind.”
While acknowledging that Hemas will buy hotel properties at the ‘right price’, Mr. Enderby said the prices tend to “run away’ in this market. Managing others’ properties is a model that “we’re looking at”, he added, but said that they haven’t found anything as yet.
He explained that in Sri Lanka, (historically) ownership and management have been the same. “Ownership is capital intensive. Hotel management on the other hand is a highly skilled area. In many places in the world, ownership and management isn’t the same. So this is a model that we’re looking at,” he said, adding that they may eye the region in the longer term. “But right now that’s not at the top of our priority list as our plate is full in Sri Lanka.”
The diversified conglomerate with a presence in fast moving consumer goods (FMCG), healthcare, leisure, transportation and power sectors has been a key player in the FMCG space of the country for over 50 years catering to the personal care, personal wash and home care segments.
Mr. Enderby said Hemas’ fully owned distribution network for FMCG products was launched in Bangladesh on Monday. “After one year, we launched our Kumarika hair care products there. With this channel a huge growth opportunity is there for us in Bangladesh in FMCG,” Mr. Enderby added.
He said Hemas is thinking about a regional strategy starting with Bangladesh. Pakistan in this regard is an idea Hemas is exploring.
Hemas has a leading presence in the pharmaceutical industry holding a near 21 per cent market share in Sri Lanka’s pharmaceutical imports and distribution whilst owning and managing three hospitals in the suburbs of Sri Lanka with bed strength of 205, taking up some 10 per cent share of fully fledged private hospital beds and a chain of diagnostic laboratories. Mr. Enderby said a year ago Hemas wanted to raise external capital in hospitals, but thought otherwise as it wasn’t a good time. “Now it’s about consolidation in this sector and we won’t be expanding immediately,” he said, adding that their land between Moratuwa and Ratmalana which is for another hospital will be developed in the longer term.
Hemas wants to exit its power business in a bid to concentrate on its core competencies in the Leisure, Healthcare, Pharmaceutical and Transportation sectors. Last month, a consortium of buyers comprising NDB Capital Holdings PLC, ACL Cables PLC and Trydan Partners Pvt Ltd said it was buying a 75 per cent stake for Rs. 1.68 billion. Mr. Enderby said that before Christmas this transaction will be completed. Hemas Power operates a 100MW thermal plant Heladhanavi as a joint venture which is nearing the expiry of its Power Purchase Agreement in December.
The company’s Power sector recorded a revenue dip of 45.1 per cent in the first quarter 2015 to Rs. 94 million owing to low rainfall in catchment areas and the delay in the south west monsoon. The company’s hydro power capacity stands at 11.4MW via the operation of five5 mini hydro plants.