Asian Hotels to benefit from new room rates

The introduction of minimum room rates for Colombo city hotels by Tourism Ministry will result in higher income for the hotels, while John Keells Holding (JKH) which controls nearly 40 percent of the five star hotel rooms through its subsidiary Asian Hotels and Properties (AHPL) will add to its bottomline considerably, according to industry analysts.

“Depending on the band assigned to the hotel, the room rates would differ and with the hotels dependant on business travellers, the new rates will help the city hotels secure a higher income,” Anita Muttukumaru, Research Analyst C.T. Smith Stockbrokers (Pvt) Ltd said.

AHPL reported a third quarter net profit of Rs. 292 million, resulting in the nine month profit rising marginally to Rs. 362 million.
Analysts said AHPL’s hotels – Cinnamon Grand and JKH’s direct interest in Trans Asia – both controlling nearly 40 percent of the five star hotel rooms in Colombo will benefit largely with the new room rate bands.

However, profitability of the hotels sector of JKH fell by 36 percent to Rs. 70 million as a result of a fall in tourist arrivals due to the increase in North – East conflict.

Trans Asia reported a 14 percent decline in its nine months net profit to Rs.75 million, while Cinnamon Grand reported a net profit of Rs. 56 million, which was down by 21 percent. “This was primarily due to higher interest costs, which were up by 59 percent to Rs.186 million during the nine months,” Muttukumaru noted.

AHPL is the developer of apartment complexes Crescent Residencies, The Monarch and The Emperor.

“The construction of the 195 The Monarch apartment tower was completed and just over 50 percent of the profits booked in the remainder of the profits will come in the fourth quarter when the apartments are handed over,” Muttukumaru said.
(TR)