The premier blue chip company John Keells Holdings PLC (JKH) said it is reporting a gradual recovery in hotel occupancy rates after the Easter Sunday setback that is having a crippling effect on the hotel and leisure sector.
“Bookings are looking a little better with a gradual recovery in the occupancy rates and this is a positive sign for the leisure sector rebounding after the terror attacks,” JKH Holdings Chairman Krishan Balendra said.
However, echoing the same sentiments expressed by other hotel operators, Balendra said this year’s winter holidays will not be as good as last year’s, with arrival numbers expected to be much less than last year.
“We will know the actual numbers for the winter season only by the end of September when bookings for the season starts,” Balendra said, adding that work on its iconic Cinnamon Life integrated complex is progressing at a satisfactory pace with a full completion of the project expected by 2021.
The 800-room complex in Colombo comprises a mall, a hotel, office towers and apartments.
The Cinnamon Life project marked a milestone in its construction in June 2019, with the topping-off of all its six buildings. Construction is now focused on the installation of the façade, mechanical and electrical services and interior works. The pre-sales of the Residential Towers is currently at 65% of total area available for sale, and the Group expects sales momentum to improve as completion draws nearer.
The Tri-Zen residential development project completed its piling works in June, ahead of schedule. Over 206 of its 891 units were pre-sold as at June 30, 2019, and revenue recognition will commence from the next quarter onwards.
The diversified JK conglomerate reported a top-line growth of five percent with most sectors except leisure, performing well, while the bottom-line declined sharply largely due to non-operational factors.
Consolidated revenue in the first quarter of FY19/20 grew by 5% to Rs. 31.74 billion. The Group earnings before interest, tax, depreciation and amortisation (EBITDA) at Rs. 4.04 billion was a decrease of 10% over the adjusted EBITDA of Rs. 4.51 billion recorded in the previous financial year.
The Group’s Sri Lankan leisure business was significantly impacted by the terror attacks and EBITDA for the first quarter of 2019/20 was a negative Rs. 332 million, compared to the Rs. 228 million (adjusted) recorded in 2018/19 Q1.
JKH said the City Hotels sector recorded a decline in occupancies and average room rates but maintained its fair share of available rooms in the 5-star category in the quarter under review. The Group is encouraged that forward bookings for the Sri Lankan hotels have witnessed an upward trend in recent weeks, reaching levels of approximately 75% compared to the bookings received at the same time last year, indicating some signs of recovery. The Maldives resorts segment recorded a strong growth driven by higher average room rates of the newly refurbished water bungalows and over-water suites at Ellaidhoo Maldives by Cinnamon and Cinnamon Dhonveli Maldives.
Cinnamon Dhonveli Maldives was partially closed for refurbishment in May 2019 with expected completion in October 2019. The newly reconstructed Cinnamon Hakuraa Huraa Maldives and Cinnamon Bentota Beach will commence operations in December, as planned.