Keells hotels in the top slots in resort space
View(s):John Keells Hotels (KHL) competes in the number of 1 to 3 position in the Sri Lanka resort space with competition from Aitken Spence Hotel Holdings, privately owned Jetwing Hotels group and Amaya Leisure, a Softlogic Stockbrokers Report says.
Being a pioneer in Sri Lanka’s hospitality industry, KHL has the largest room portfolio in Sri Lanka and the group has refurbished most of its key properties, whilst adding 350 rooms in FY12-13, the report said.
The Cinnamon Brand,Colombo
“As future strategies, KHL announced plans to consolidate its overall branding strategy where all its existing resorts would be brought under the ‘Cinnamon’ brand during the coming years. Currently only four Sri Lankan properties are starred in the premium brand category. Therefore once consolidated the group would see all its properties in Sri Lanka and Maldives amounting to 1,336 rooms tagged under its Cinnamon brand,” the report said, adding that KHL has laid down plans to increase its capacity by adding two properties in Nuwara Eliya and Yala. KHL topline remained intact at Rs. 2.9 billion during 3QFY15 due to the Maldivian sector shouldering nearly 55 per cent of the group turnover dipping marginally. “However, the Sri Lankan sector revenue showed single digit growth which is 2.6 per cent year on year (YoY)) in 3QFY15. Both segments were adversely affected by external dilemmas where occupancies during the peak booking periods of November and December were impacted by the economic volatility in Russia and the continuing unrest in Ukraine. On the back of the marginal revenue growth, faster escalating overall costs and higher tax expense, KHL’s net earnings declined 7.6 per cent YoY to Rs.417.6 million in 3QFY15. Group tax expense rose amidst taxable profits declining due to the large increase in the Sri Lankan segment’s tax expense.”
The report said tourist arrivals to Sri Lanka grew some 13 per cent in 3QFY15, although the performance of the Sri Lankan resorts was impacted by the timing of the Presidential Election which was held in January 2015. Thus occupancies of the local segment dipped marginally from about 83 per cent in 3QFY14 to nearly 78 per cent in 3QFY15. Maldivian tourist arrivals for the quarter showed a marginal dip of 1 per cent although John Keells properties managed to sustain occupancies at +90 per cent (similar levels as 3QFY14) despite taking a marginal hit on their average room rates (-16 per cent YoY).
In 1-3QFY15 KHL Group revenue grew 6 per cent YoY to Rs. 9 billion due to the growth in both segments. Further aided by the large decline in net finance costs, net earnings saw a sharp increase of about 49 per cent YoY to Rs. 888.5 million. “The Sri Lankan segment saw sharp growth in profits amidst 1-3QFY14 recording a loss whilst Maldives shouldering nearly 74 per cent of group earnings grew about 3 per cent YoY.”