Financial Times

Aitken Spence freezes planning on $15m luxury resort
Uncertainty over coastal buffer zone
Aitken Spence has temporarily frozen planning on the $15 million luxury resort and spa in Ahungalla, a joint venture with the up-market Six Senses group, owing to continuing uncertainty over the new coastal buffer zone rule, although the conglomerate remains bullish on tourism prospects in the island, company officials said.

The company had applied for permission for the project before the December 26 tsunamis devastated the coastline and wrecked many resorts, prompting the government to introduce stricter rules restricting building near the beach.

Aitken Spence has tied up with Six Senses, a resort and spa management and development company based in Thailand, to build the resort with 40 luxury villas on a plot of land next to its Triton hotel.

The government last week announced it would strictly enforce the rule preventing construction within 100 metres of the high water mark on the beach but some officials said the authorities would be flexible and allow building on a case-by-case basis.

"We have temporarily frozen planning on the project," a senior Aitken Spence official said. "However, both we, and our partners, Six Senses, are optimistic about the project." The Six Senses resort project, which the company had hoped to open next year, might now be delayed.

"However, nothing has been cancelled. We're still very positive and bullish about prospects for tourism in Sri Lanka. We're just cautious." Company officials said they believe the authorities might retain the previous restrictions allowing for a shorter buffer zone or allow enough flexibility to enable projects that had already been approved to go ahead.

They pointed out that in the Thai tourist resort of Phuket coastal environmental restrictions were far less stringent than that proposed here. The industry is waiting for government clarification about the rule given the conflicting views expressed by different officials.

Tourism Minister Anura Bandaranaike has described as "stupid" the 100-metre buffer zone and has called for flexibility on the matter in response to lobbying by the tourism industry which fears it could hurt the industry.

Bandaranaike's remarks were made in an interview with the Asia Tribune in which he warned that investors whose projects had already been approved by government might pull out if the rule was strictly enforced. President Chandrika Kumaratunga has directed the Public Security, Law and Order Ministry to ensure that no construction of new buildings is allowed within the 100-metre buffer zone.

Six Senses has a resort known as Soneva Gili, a ten-minute boat ride from the Maldivian capital Male, in which the cheapest villa suite goes for US$740-1,430 on a room only basis during the peak season.

Soneva Gili Resort & Six Senses Spa experienced some damage from the tsunami and was closed for repairs but there were no serious injuries among guests.

Aitken Spence's own beach resorts in the south coast, Triton Hotel, Ahungalle, and Neptune Hotel, Beruwela, were damaged by the tsunami. While Neptune is back in operation, Aitken Spence has decided not to re-open Triton because the company had planned to close it in May for a complete refurbishment.

The planned Rs 450 million refurbishment would see the hotel, Sri Lanka’s first five-star beach resort being upgraded and repositioned to cater to up-market tourists. It will be re-opened in November in time for the next tourist peak season.

A spa will be added and conference facilities modernised to cater to the international conference market.

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