Sri Lankaâ€™s Serendib Hotels December profit down 50-pct
ECONOMYNEXT – Sri Lanka’s Serendib Hotels group said net profit fell by half to Rs17 million from a year ago as costs rose amid stiff competition from the informal sector which reduced occupancy levels and room rates.
Sales rose 12% to Rs487 million over the period, according to interim results filed with the stock exchange.
Quarterly earnings per share were 15 cents. Serendib Hotels was last traded at Rs17.10 Tuesday.
The firm made a loss per share of 35 cents in the nine months to 31 December 2017 witth a loss of Rs39 million compared with a Rs24 million profit the year before and sales growth flat at Rs1.2 billion.
Serendib Hotels executive director Malinga Arsakularatne said that during the December 2017 quarter, occupancy across group hotels stood at 74%, down from 79% in the same period last year. Group occupancy for the nine months stood at 69%.
Serendib Hotels group owns and operates four properties, Avani Bentota Resort & Spa, Club Hotel Dolphin Waikkal, Hotel Sigiriya and the Lantern Beach Collection Mirissa. But Avani Kalutara Resort operating results were not reflected in the group financial statements of Serendib Hotels as Jada Resorts & Spa (Pvt) Ltd., its owning company is treated as an investment.
Arsakularatne said the performance at Avani Bentota and Hotel Sigiriya were impacted due to the decline in room rates and occupancy during the year.
This was “mainly due to price competition from the formal sector and a significant shift in guest preferences to informal stay experiences,” he said. Hotel Sigiriya recoded a higher guest mix from online channels.
Club Hotel Dolphin’s guest mix included a larger portion of all-inclusive guests compared to last year, Arsakularatne said.
“The hotel is pleased to note a recovery from its traditional source markets for guests and the strengthening of the Euro and Sterling in the currency markets which led to an increase in average room rates at the hotel.”
Arsakularatne said that in keeping with the strategy to pursue higher yielding opportunities, its investment in the Lantern Boutique Collection enabled the group to increase its overall revenue per available room by 30% to Rs.7,500 from Rs.5,783 in the December 2016.
Costs rose owing to increases in IT-related expenses and amortization due to new system implementations, business development expenses, and costs of Lantern Beach Collection which was not included in the previous year, Arsakularatne said.
“Finance costs too have grown due to the borrowings obtained to fund the acquisition of the Lantern Beach Collection and other new business development initiatives,” he said.
However, he said the group anticipates a recovery with higher occupancies and rates in the peak tourist season, supported by the strengthening of currencies in key markets.
(COLOMBO, February 13, 2018)