Financial Times

JKH plans new 100-room resort in Maldives
The John Keells Holdings conglomerate, which has said it is intensifying its internationalizing efforts and wants to double its size in the next three years, plans to put up a new five-star tourist resort in the Maldive Islands. “We’re putting up a new property in the Maldives, a 100-roomed, five-star resort on Alidhoo island,” noted Ajit Gunewardene, JKH joint managing director, in an interview with The Sunday Times FT.

Designs are being finalized for the resort on the island leased by JKH in one of the archipelago’s northern atolls. The company already operates two resorts in the Maldives which are among the nine hotels it has in its portfolio. Gunewardene said there was intense competition for 11 islands open for bidding by the Maldives government.

Some of the other Sri Lankan tourism companies which had also bid for the islands had expressed concern over the rates. But Gunewardene said JKH believed it had got a reasonable deal.

The main criteria for bidding was the bed tax to be paid to the Maldivian government - how much the resort operator pays per bed annually. “Some appeared to be pretty exorbitant but we’re confident the rates of the island we got are sustainable and manageable,” Gunewardene said.

Gunewardene oversees the JKH’s financial services and leisure sectors of the group and the human resources and real estate functions at the centre. He becomes deputy chairman of JKH next year when its present chairman Vivendra Lintotawela retires and is succeeded by the current deputy chairman Susantha Ratnaike.

JKH’s Maldivian resorts had been doing well until the tsunami which caused a sharp drop in arrivals and hit the group’s earnings from tourism. Average occupancy in two Maldivian resorts last year was 92 per cent. JKH’s Velidhu Island Resort on Ari Atoll, 80 kms from Male, has 80 beach bungalows and 20 “over-water” bungalows. Its other Maldivian resort, Hakuraa Club on Meemu Atoll, suffered damages to its water-bungalows in the tsunami, but plans to resume full operations by the winter season of 2005.

Total revenue for the resorts segment was Rs.1.8 billion in the last financial year compared to Rs.2.3 billion in the previous year. In the nine month pre-tsunami period, the two Maldivian resorts recorded a 11 per cent and 19 per cent growth in revenue over the previous year, according to JKH’s annual report. However, final year end revenue was two per cent below that in the previous year despite a five percent increase in average room rates.

Gunewardene said tourist arrivals in the Maldives were down now because of the off-season but said the winter season was “looking decent.” The outlook for tourism in Sri Lanka in the immediate future looked uncertain but Gunewardene said he was confident it would eventually recover.

“People coming for holidays here are significantly below last year’s levels and we’re seeing a very slow recovery,” Gunewardene said. “But with some aggressive marketing and focused effort by all concerned we would recover.”

Asked about the outlook for the winter season, Gunewardene said: “It’s uncertain at this point in time but we’re confident we can have a decent season although not at the pre-tsunami record levels.” JKH’s Sri Lankan Resorts recorded a 42 per cent decline in revenues for the last financial year because of the tsunami.

In the pre-tsunami nine month period, the sector had achieved a 17 per cent revenue growth compared to the previous year. Among the group’s other hotels, Gunewardene said there was a significant refurbishment programme underway at Colombo Plaza and Habarana Village, which is being completely revamped. “The Colombo Plaza refurbishment should be over by November and will then be the premier five-star property in Colombo.”

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