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Shangri-La’s Sri Lanka hotels revenue growth surpasses all its markets
View(s):By Kapila Bandara
Shangri-La hotels in Colombo and Hambantota were the top performers in the group in revenue growth in the first half of the year, rising at a high double digit rate, while overall group profit dropped.
The One Galle Face mall and luxury apartments also generated high double digit revenue growth and Sri Lanka figured well in the investment property business revenue growth.
Shangri-La Asia interim filings show that revenue from Sri Lanka hotels increased by 44% to US$20.3 million, (Rs 5.94 billion) compared with US$14.1m in 2023. The group also further reduced its loss from Sri Lanka hotel operations.
Sri Lanka hotels revenue growth of 44% far exceeded that of Hong Kong at 7.9% and Philippines at 24.7%, the next highest growth rate. Of course, hotels revenue itself was far greater in those two markets. Hong Kong hotels revenue alone was US$150.6m.es (US$79.3m).
Shangri-La Asia, headed by Chairwoman Kuok Hui Kwong, has hotels in Singapore, Malaysia, Philippines, Japan, Thailand, France, Australia, the United Kingdom, Mongolia, as well as Fiji, Myanmar, Maldives, Indonesia, Turkey, and Mauritius.
The company has a solid balance sheet and develops, owns and operates some of the finest luxury hotels in the region. It also has a portfolio of investment properties and property projects for sale. It is listed on the main board of the Stock Exchange of Hong Kong and has a secondary listing on the Singapore Exchange Securities Trading Limited.
The post-tax loss of the Sri Lanka hotels narrowed US$300,000 for the six months ended June.
Revenue from investment properties in Sri Lanka surged by 45.1% to US$11.9m from US$8.2m in the first half of 2023. It was a “significant’’ improvement the group noted.
Commercial and office space, and luxury apartments in Sri Lanka contributed to an increase in investment properties business revenue.
In contrast, investment property revenue in Singapore and Malaysia dropped.
Earnings before interest, taxes, depreciation, and amortisation, (EBITDA, a measure of operating profit), of investment properties in Sri Lanka was US$6.9m versus US$4.2m in 2023 first half.
The revenue contribution from Sri Lanka stands out against the US$59.7m group consolidated revenue of investment properties.
In Sri Lanka, commercial rents have been increased and the level of occupancy was maintained.
Sri Lanka operating performance, stripping out factors such as interest, taxes, depreciation, and amortisation, was US$5.6m (Rs 1.64b) versus US$2.4m the year before.
Shangri-La Asia’s consolidated revenue from investment properties increased by US$7.3m, or 13.9%. Shangri-La reported that this increase was mainly due to improved performance of investment properties in Mongolia and Sri Lanka, as well as additional revenue from office and commercial space in the fully-owned Shangri-La Centre, Fuzhou in China.
The company also booked a US$9.6m foreign exchange gain from appreciation of the rupee, compared with US$42.3m the year before. There was also a net fair value gain of US$19.8m (US$29.8 in 2023) on investment properties. Both were below that of last year causing a decline in non-operating items and further impacting the overall consolidated profit, the group reported.
The occupancy rate in Sri Lanka was 43%, low compared with Malaysia and Japan, but the average room rate of US$160 was higher than in the big cities in China (US$157), Malaysia (US$124), and Thailand (US$159).
But, revenue generated from a room (average daily rate multiplied by occupancy rate) in Sri Lanka was US$68 compared with US$82 in Malaysia and US$419 in Japan, and US$97 in Thailand. In Hong Kong, the group generated US$202 per room.
For the six months ended June, Shangri-La Asia consolidated profit was US$94.5m versus US$131.4m, a drop of 28.1% from the year before. Consolidated revenue grew by 4.3%, or US$43.1m from the year before to US$1.04b with hotel revenue at US$935.7m. Of this, hotel room revenue was US$508.55m, while food and beverage sales was US$371.17m. Group operating expenses have increased.
Basic earnings per share were 2.661 US cents versus 3.688 US cents.
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