Tourism sector profits at Aitken Spence slide
View(s):The tourism sector profits at Aitken Spence have declined by 1.2 per cent mainly due to the decline in profits from hotels both in Sri Lanka and overseas, Group Chairman Harry Jayawardena said in a statement made in the Annual Report in releasing the 2014/215 financials.
However, the destination management segment was said to have performed “exceptionally well,” he said. Profit for the year in the tourism sector was at Rs.3.6 billion for the financial year 2014/2015 compared to Rs.3.7 billion made last year.
The global political and economic conditions had impacted the tourism sector profits for the year mainly with the Maldives hotels feeling the pinch particularly from the Russian market that was down by 40 per cent and the Korean market showing a significnt drop, during the first financial quarter. Aitken Spence, which has several resorts in the islands, has been adjusting to changing market conditions in the Maldives with several key source markets to Maldives facing downturns as a result of which there was a profit drop of 2 per cent for hotels there, it was noted.
In the following year Aitken Spence believes they would be able to attract higher occupancies in its owned and managed resorts.
Meanwhile, the company is looking at changing its hotel operations in India to an owner operator model from the previous management contract model by acquiring a 143 room hotel in Chennai under the brand “Turyaa” that is expected to commence operations soon.
Aitken Spence had acquired two new islands in Maldives one of which is adjacent to Meedhupparu resort and the other was taken over at the end of the financial year. In addition, the group has also acquired a strategic stake in Amethyst Resort in Pasikudah and they were currently completing the reconstruction of the fire-damaged 20 ocean villas in 2013; and an addition of 20 garden villas, which commenced operations in September 2014 at Adaaran Select Hudhuranfushi.
Though the Heritance Kandalama and Heritance Tea Factory posted good revenue growths of 3.8 per cent and 11.5 per cent, respectively its beach front property Heritance Ahungalla did not perform as expected with a decline in revenue of 6 per cent.
The company stated that this was mainly due to the pressure from the high room inventories and competition from the low end and informal segments operating along the coastal belt. The Sands in Kalutara too did not perform to expectations, which had been added on with 91 more rooms to enhance the resort’s capacity to 200 rooms.
The economic downturn in Europe had impacted on Heritance Ayurveda Maha Gedera and the depreciation of the Euro against the dollar had a further negative impact on the property’s performance, it was noted. Aitken Spence noted that Sri Lanka continued to be impacted by the lack of destination marketing in comparison with its regional competitors such as Thailand, Malaysia and Vietnam. Notably, some major tour operators have channeled their European charters away from Sri Lanka over the last few years due to which it was imperative that the country strategically targets this segment through promotions and incentives, it was stated.
Meanwhile, Aitken Spence Travel has surpassed 100,000 travellers for the financial year with strong numbers coming in from the UK, Germany, India, Russia and China and the company looks to focus on the Middle East as well that has seen considerable growth as well.
It has been observed that China is expected to overtake the Indian market to become the fore most feeder market. The company is also looking at how Sri Lanka could avoid losing Ukrainian business as Ukraine is considered a bulk purchaser of rooms in the country during the winter season.
Moreover, it was noted that the slowdown in Spain, Portugal, Italy and Greece continued to drag down European sentiment, dampening appetite for long haul travel to destinations like Sir Lanka.