Spence eyes strategic businesses in Maldives, India and West Asia
View(s):“We are constantly eyeing opportunities in these two sectors. We are already in discussion with certain parties pertaining to some areas,” an official told the Business Times. He declined to elaborate but added that hotels and logistics such as port management that they do in Fiji are in the cards for the group.
The company’s hotels segment locally and in South Asia and the West Asian sectors witnessed a declined bottom line during Q2 FY 17, due to the growing competition in the market, analysts said. This may be a reason that Spence also wants to get into the health sector as they can balance the impairments with a business such as pharmaceuticals where the state has granted concessions to encourage manufacturers with the National Medical Drug Policy passed in Parliament in 2015. The National Medicinal Drug Regulatory Authority Bill was formulated to encourage local manufacturers to start their plants.
The leisure sector remains a major concern in Sri Lanka where 5- star hotels are losing their market share to budget accommodation, resulting in unbearable absorption in fixed costs, analysts say. The latest additions to Spence’s room inventory via joint ventures, worsened the impact on the group bottom line with heavy losses, according to the analysts who added that FY 2018E won’t be that great due to shrinking accounting rate of return (ARR) which is the amount of profit, or return, an individual can expect based on an investment made in a competitive market, amidst continuously rising finance costs.