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FINANCIAL CHRONICLE™ » DAILY CHRONICLE™ » Best ever performance by John Keells Hotels,Rs. 1.1 bn. profit

Best ever performance by John Keells Hotels,Rs. 1.1 bn. profit

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Global Moderator

Group controls valuable land bank in tourism

John Keells Hotels PLC has posted its best ever results in the year ended March 31, 2012 with after-tax profits topping Rs.1.1 billion, up from Rs.526 million the previous year, and revenue growing to Rs.7.4 billion from Rs.5.9 billion a year earlier.

The company which owns seven resort hotels in Sri Lanka and three in the Maldives has invested substantially in refurbishing and expanding existing properties with Mr. Susantha Ratnayake, the company’s Chairman, saying that notable improvements in occupancy and yields in the Sri Lankan resorts resulted in 54% revenue growth during the year – up to Rs.2.8 billion from the previous year’s Rs.1.8 billion.

In the Maldives too the John Keells resorts had achieved occupancy higher than the country average there by doubling growth in Chinese market share.

In addition to its hotel properties, the group controls 44.4 acres of land in Trincomalee, 10 acres of land in Kandy, 25.2 acres of land in Wirawila and 11.4 acres of land at Beruwala with potential for future development of resorts.

Ratnayake said that they had invested Rs.1.3 billion in the makeover of Chaaya Tranz, previously Coral Gardens, Hikkaduwa adding a balcony to all the guestrooms and completely redesigning restaurants and bars to create large public spaces.

The Yala Village, now rebranded Chaaya Wild had seen an investment of Rs.440 million. The property was launched last November and the revenue since generated there exceeded total revenue for the entire previous year.

The 200-room Chaaya Bey at Beruwala will be receiving its first guests in September. Ratnayake said that this hotel is setting new benchmarks in design, construction and operations.

The Chaaya Citadel in Kandy closed for extensive refurbishing in May will reopen in time for the 2012 winter season, he said.

In the Maldivian resorts, revenue was up 18% to Rs.7.4 billion although tourism there had to carry the greater crunch of European economic uncertainty with arrivals growth from the more established Italian and British markets turning negative. Following the earthquake and tsunami in Japan, another source market, Japanese arrivals too had declined.

"Nevertheless, the Maldives recorded a 15% growth in tourist arrivals during the financial year under review due to the 54% growth in arrivals from China," the report said noting that China was now the foremost visitor generating country to the Maldives.

Arrivals from Russia too were up 29% with that country displacing France as the fifth largest visitor generator.

The report said that in Sri Lanka, Bentota Beach Hotel, Chaaya Citadel, Cinnamon Lodge and Chaaya Village were the major contributors to profitability of John Keells Hotels. The group had posted an earning of Rs.1.64 billion before interest and tax compared to Rs.1.1 billion the previous year.

Ratnayake stressed that it is essential for the tourism industry here to leverage the interest in the destination created by global tourism media through a strong, coordinated, focused and sustained promotional and development campaign.

"Such a campaign is long overdue and is an imperative for the success of the industry," he said.

JKH with 80.32% dominantly controls John Keells Hotels followed by the Sri Lanka Insurance Corporation (5%), EPF (3.32%) and Mercantile Investments (0.89%). The ETF (0.29%), NSB (0.24%) and the Bank of Ceylon (0.19%) are also among the top 20 shareholders.

The company has a stated capital of Rs.9.5 billion, capital reserves of Rs.1.8 billion and revenue reserves of Rs.2.5 billion in its books. Total assets were running at Rs.23.36 billion, non-current liabilities at Rs.6 billion and current liabilities at Rs.3.5 billion.

The company’s share traded at a high of Rs.18 and a low of Rs.10.50 during the year under review against a trading range of Rs.23 to Rs.17.10 the previous year.

The directors of the company are: Messrs. Susantha Ratnayake (Chairman), A.D. Gunewardene, J.R.F. Peiris, J.E.P. Kehelpannala, M.A.Omar, R.T. Wijesinha, D.A. Cabraal, N.B. Weerasekera and B.J.S.M. Senanayake.

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