ECONOMYNEXT- Sri Lanka’s Aitken Spence Hotel Holdings will pursue management contracts for overseas hotels to diversify the business, top officials said.
"The Group plans to drive growth of our portfolios through expansion of managed properties both overseas and in Sri Lanka," Managing Director Parakrama Dissanayake told shareholders in the firm’s annual report.
"Expanding our geographic footprint will be a priority leveraging the successful deployment of our time-tested business model overseas," he said.
Aitken Spence Group Chairman Harry Jayawardena said that expanding overseas is crucial for diversifying the business.
Aitken Spence owns one hotel in the Maldives and manges six more, while owning one hotel in Oman and managing three more. It also owns one hotel in Chennai, India.
The firm owns eight hotels in Sri Lanka and manages three more.
Dissanayake said management contracts are being sought in all three overseas locations the firm is currently active in.
"Our plans for Maldives moving forward will focus on expanding our hotel management services portfolio as room inventory increased outpacing demand as there was little effort to increase promotions in line with supply," he said.
He said the Indian hotel, situated in the Indian IT corridor, has faced ‘a tough journey’, with operating profits inadequate to cover finance costs, despite having high occupancy and room rates in its niche market.
"Our plans in India are to use Chennai as a base to secure management contracts in India in the resort segments which is our key strength," he said.
Sri Lanka is facing a downturn in tourism due to the Easter Sunday terror attack.
Dissanayake said that he is expecting tourist arrivals to recover over the next six months.
The informal sector has been pressuring formal hotels in Sri Lanka, and many newly started hotels are looking for an experienced hotel chain to manage their property, analysts say.
Occupancy at formal hotels fell to 72.77 percent in 2019 from 73.27 percent in 2018, due to higher supply of hotel rooms and the rising informal sector, Aitken Spence said.