Hilton eyeing southern resort

The Hilton chain managing the Colombo 5-star property owned by the Hotel Developers (Lanka) Ltd (HDL) wants to build a new 340-room southern resort while agreeing to ‘substantially’ reduce its management fee under a new agreement being negotiated for the Colombo Hilton.

Nawaz Rajabdeen, HDL Chairman, said the company has offered 12 sites from Wadduwa to Hambantota to Hilton for the new project and a site is likely to be finalized early next year. “We have offered the land as our (government) investment in the project while at the same time requesting the Hilton management to reduce its management fee for the existing property,” he told The Sunday Times FT, adding that the management company was favourably looking at the proposal.

He declined to give the management fee involved but said the new management contract would be a 10-year agreement and renewed after every decade. The owning company, which is facing a court action seeking its winding up, is negotiating with Hilton’s regional director based in Singapore.

Rajabdeen said the hotel was doing well despite the uncertain tourism climate. The management agreement had been initially signed for 50 years and was coming up for renewal in 2007 after 20 years. Two weeks ago the Colombo District Court was petitioned by Nihal Sri Ameresekere, a shareholder and a former HDL chairman to wind-up the bankrupt company on the grounds that it is heavily indebted to the government.

His petition said that HDL has defaulted ‘enormous debts’ to the government totaling Rs 5,566,880,397 as at June 30, 2006 and debts Rs 2,386,551,716 (excluding interest) to the Japanese contractors.)