Added luxury, rising material prices cost Rs. 902 m more for now 5-star Citrus Waskaduwa

Added luxury, new facilities and higher material prices have pushed the cost of upcoming Citrus Waskaduwa resort by an extra Rs. 902 million as opposed to Rs. 1.8 billion stated in the IPO prospectus, the company has disclosed.

The company said Citrus Waskaduwa is well on the way to start operations ahead of schedule in early 2015. Although it was originally planned to be marketed as a four star property, Citrus Waskaduwa will now be marketed as a five star property.

This is following the overall product offering of the 150-room property redefined with added luxury, upgraded facilities and new amenities.

“This is due to changing market conditions and the evolving demand of the trade and tourism industry. The anticipated landscape of the hospitality offering in this geographic area has also changed. This has created an opportunity for a premium property in Waskaduwa. Citrus Hikkaduwa was upgraded and refurbished recently which gave rise to the need for the Citrus brand to offer a solution to tourists from the supper segment of the market,” the company said in its filing to the CSE.

Expedited construction has also faced many challenges such as escalation of construction related items including cement, steel, sand, bricks, tiles and glass. In addition, fluctuation in exchange rates has also adversely affected cost of imports of construction material and hotel operating equipment.

The Board of Citrus Waskaduwa has proposed to raise additional cost by way of inter-company borrowings or financial institutions or by way of an injection of fresh capital, the company said adding that a final decision would be taken in the near future.

The additional costs were attributed to the following key areas of its construction.

All 150 rooms have been enhanced with extra space, better quality finishes, king size beds, day beds, larger TVs, luxury bathrooms fittings and other amenities. A junior suite has also been added to the inventory in addition to the presidential suite.

Four additional restaurants offering specialty cuisine of a wide variety to guests while the capacity of the main banquet hall was accordingly increased and its facilities enhanced to international standards. This was done in anticipation of hosting international events and to promote the hotel as an ideal location to host large scale MICE events given its proximity to Colombo.

The hotel will also feature a secondary banquet/conference hall with a capacity to host 200 guests. The gymnasium has also been relocated with additional space included for more equipment in keeping with five star standards and will include an indoor games room with billiards/snooker tables and a signature bar within this area. An additional 80 perch block facing the sea adjoining the existing property has also been developed for an outdoor amphitheatre.

Citrus Waskaduwa has also invested in initiatives to control anticipated escalating operational costs. These include a large water treatment plant in order to store and recycle water, as well as LED lighting for the entire hotel to save on power consumption.
http://www.ft.lk/2013/12/24/added-luxury-rising-material-prices-cost-rs-902-m-more-for-now-5-star-citrus-waskaduwa/

There is a time value for money. This will be the case for Kalpitiya too, alternatively they have planned to reduce the number of Villas

Any idea of how to raise new funds?

If they go for debt finance that will increase the finance risk of the entity. Is a right issue on its way?

I originally expected a fall in share price. so that can collect some more. But share price went up. But hope in the next few weeks, the prices will go down

"Citrus Waskaduwa will now be marketed as a five star property."
With this, CITK will be an expensive star class hotel in the area.. I guess not much of 5 stars found in there???   

The much needed refurbishments for CITH has brought cost benefits for casual visitors as well.. This is not an expensive hotel to dine in for buffet.. I think the new move will brand Citrus as a all-class facilitator catering to diverse needs in the current market.

However, to collect we have to wait more as its not sure how the retailers take this.. Sometimes we always see
dark clouds and ppl who see silver lines ahead of others will win at the end..

Is there excuse about the lack of infrastructure, the real issue with CITK indefinite delay?
Or is it lack of funds as a consequence of their CLND hold..?

gamaya wrote:Is there excuse about the lack of infrastructure, the real issue with CITK indefinite delay?
Or is it lack of funds as a consequence of their CLND hold..?

Issue is Disc Jockeys trying to manage hotels.
No clear plan, no clear management vision, no implementation. CITH minority shareholders have to guarantee for CITW bank loans, in future CLND may have to guarantee for CITK.

I think there should be a strict management on sl hotels.

These are my observations regarding hotels in Kalutara. I do not know this represent the entire industry. Foreigners have become cost conscious than locals. Royal Palm Beach Hotel being a 5 star charge Rs 2000 more than its neighboring hotel Tangerine which is a 4 star one. There were many foreigners in Tangerine than RPBH.

The foreigners take Half Board packages and take lunch out in small joints scattered near star grade hotels. These joints offer all they can to foreigners and these are family run massage palours with WIFI free boards.

These joints make less occupancy for big hotels and also make less revenue for big hoteliers. However if these are the preference of the foreign tourists the hoteliers have no other alternatives.

Once Sunday Island editorial was about less occupancy rate in star grade hotels . In the same edition there were two press releases of hotels and one was Eden.
These press releases highlight that the hotels had recorded ever highest revenue and the occupancy ratio was about 60%.

Thus we have to look at the preference of tourists, the occupancy ratio of hotels and the independence of banks when releasing loans for hotel projects.