Colombo, July 11 (EconomyNext) – Sri Lanka’s listed TAL Lanka Hotels which owns five-star Taj Samudra Hotel in Colombo says it’s in the final phases of refurbishing and plans to further upgrade the property to capture market share as the city’s hotel room inventory continues to increase.
Business is under pressure with hotels in Colombo reporting an average occupancy of 65 percent during the year due to low growth in tourist arrivals (up 3.2 percent to 2.1 million in 2017) and new hotels in Colombo especially in the budget and mid-market segment, the company said in its annual report for 2017/18.
“These hotels are a welcome addition to a market previously dominated by five-star hotels and have quickly been absorbed in the market given their popularity with price conscious travellers,” said Vish Govindasamy, a director, told shareholders making the Review of the Board of Directors.
However, as a result, existing five-star hotels are restricted from increasing prices, he said.
TAL Lanka revenue fell 2 percent to 2.8 billion rupees in the year to end March 2018, and earnings fell 8.5 percent to 94.8 million rupees in the year to end March 2018.
Revenue from rooms fell 7.5 percent to 1.53 billion rupees, while restaurant dining grew 8.9 percent to 1.1 billion rupees and shop rentals grew 8.6 percent to 47.3 million rupees.
Income from renting and hosting banquets and other events fell 37.6 percent to 30.2 million rupees and income from laundry services fell 29 percent to 5 million rupees.
TAL Lanka says it is continueing a facelift to stay competitive.
“Renovation work on the second floor is expected to be finalised this year and the company has also planned to undertake improvement works to upgrade the property in the coming financial year and to increase market share of the hotel,” Govindasamy said.
“The economic outlook remains favourable provided the government is committed to the reform agenda of improving competitiveness, governance and public financial management.
“Growth is projected to rebound in 2018 from a low base and continue to be around 4.5 percent in the medium term, driven by private consumption and investment.”
Sri Lanka’s rupee is expected to depreciate over the next five years, he said.
Management fees from Airport Garden Hotel grew 17 percent to 16.7 million rupees while dividend income from associate company Lanka Island Resorts nearly doubled over a year earlier to 1.2 million rupees