Sri Lanka’s Lighthouse Hotel profits down on forex loss
ECONOMYNEXT – Profits at Sri Lanka’s Lighthouse Hotel fell 21 percent to 6.2 million rupees in the September 2015 quarter from a year hit by a forex loss, while revenues remained flat.
The firm reported earnings of 14 cents per share for the quarter. In the six month to September profits were down 72 percent to 6.6 million rupees.
An upmarket hotel in Sri Lanka’s South West coast near Galle, Lighthouse said revenue fell 1 percent to 169 million rupees while expenses was flat.
The was hit by a 7.8 million loss on a forex loan after Sri Lanka’s rupee fell as the Central Bank printed money to finance a budget deficit.
Though a ‘loss’ is charged to account, assuming the same volume of sales priced in dollars, a fall in the currency increases nominal revenues, giving more rupees to service a forex loan.
Currency deprecation does not actually increase the real liability of dollar loans, but it decreases the real liability of loans and costs priced in domestic currency and real salaries of workers.
Many Sri Lankan hotels and also exporters have borrowed dollars in recent years, and charging the forex loss is important to reduce calls for currency depreciation, whose perceived benefits of devaluationism is an aspect of what is called the ‘money illusion’ and comes primarily from a fall in real salaries of workers. (Colombo/Oct29/2015)