Financial Times

JKH hotels under Cinnamon brand
John Keells Holdings (JKH) is placing its 11 hotels under a new “Cinnamon” brand in a million dollar re-branding effort that positions the conglomerate to go international as a hotel chain.

It plans to increase its hotel portfolio with investments in South Asia, South East Asia and possibly the Middle East and is also gearing to re-launch its five star city hotel, The Colombo Plaza, in November under the new brand name, industry sources said. They said that the hotels will be re-branded under Cinnamon Hotels and Resorts in order to create a chain, both locally and internationally, while the company is actively looking at India, Pakistan, Bangladesh and Singapore to expand.

“We are re-branding and repositioning our hotels and definitely going international, because it is part of the JKH strategy to have 20 hotels by the year 2020,” Rohan Karr, Executive Vice President, JKH and Sector Head City Hotels, heading the branding strategy for the company, told The Sunday Times FT.

He declined to confirm the name of the new brand, as it is presently being registered in the country as well as the Asian region, and would only say: “We are in the process of registering our new brand name, which is a very ethnic name in the country and the Asian region and have invested 1 million US dollars to discover identity and develop it,” he said.

Karr said the hotels under the new branding strategy will have two tiers. “It will be positioned on an upper and a mid market tier.” He said in order to implement the new brand name the company has set a framework for all its existing hotels by categorising each into these two tiers.

“We have set a minimum standard to the hotels, such as building a new restaurant, changing the entire cutlery or changing the interior. Depending on these aspects we are planning to set a budget for re-branding them,” he said.
The company’s finest properties, such as The Colombo Plaza (which industry sources said will likely be re-branded as Cinnamon Grand), Trans Asia, Bentota Beach Hotel, Citadel, Habarana Lodge and their two hotels in Maldives, the Hakuraa Club and Velidhu Island Resorts will be in tier one.

Coral Gardens, Beach Hotel Bayroo, Club Oceanic and Habarana Village will be in tier two. Coinciding with The Colombo Plaza re-branding, the company will have its own stall at the World Travel Mart in London to promote both the new brand and its flagship hotel internationally. Trans Asia will be re-branded in February 2006 and the company is targeting at re–branding a hotel every two months thereafter.

Karr said there is great potential for this re-branding exercise mainly because the present Keells Hotels product cannot be sustained for the international traveller or Sri Lankan travellers in the long run.

“We have recognised that more of the same is not sufficient and we are changing everything from our products, culture, and value and positioning the hotels to meet different customer expectations,” he said. “The products that we have were fine for the last 20 years, but now we see more sophisticated and mature travellers who look for more,” he added.

When the new brand is created, the company would initially focus on having hotels in the South East Asian region. “Then we might look at Middle East or even further,” Karr said.

JKH will seriously begin its expansion plan two years after the new branding exercise, but will invest in suitable properties when the opportunities arise.
“It will take two years to gain the customers’ and the employees’ confidence as well as the brand’s security, its consistency and promise. We will focus on our expansion plan seriously after such time, but if there is any property that comes up within our requirements, we will definitely take it up,” he said.
The leisure sector of the company currently adds 34 percent to the bottom-line. Guest nights per tourist also increased for JKH’s city hotels, The Colombo Plaza and Trans Asia, during the last two years.

Occupancy of the city hotels in the country increased from 45 percent in 2001 to 69 percent in 2003 and 72 percent in 2004. The city hotels enjoy a higher proportion of revenue generated through banquet services (broadly a fifth of the total revenue) reducing their sensitivity of earnings to tourist arrivals. Last year, Trans Asia recorded 68 percent occupancy, a nine percent jump from 2003, whereas The Colombo Plaza had 83 percent occupancy, as opposed to the 63 percent recorded in 2003. Presently JKH accounts for broadly 25 percent of graded accommodation capacity in Colombo. In other areas of the country, JKH’s share is around 7.6 percent, making its total accommodation share 10.9 percent.

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