Sri Lanka’s leading transportation and leisure sector giant blue chip John Keells Holdings (JKH) in the latest quarterly review points out that the Leisure industry group Profit Before Tax (PBT) is negative and recorded a loss of Rs.278 million in the first quarter of 2018/19 which is decrease over the first quarter of the previous financial year that was recorded to be a profit at Rs.179 million.

 “The decline is mainly attributable to the lower profitability in our city hotels and a non-cash impact of Rs.202 million which was recorded at “Cinnamon Hakuraa Huraa Maldives” on account of an impairment loss on non-financial assets arising from the closure of the hotel for re-construction” the financial review highlights. Further “Ellaidhoo Maldives by Cinnamon” is partially closed for on-going refurbishment which has impacted occupancy according to financials.

However the report outlines that the City Hotels sector recorded an improvement in average room rates, and that profitability was impacted by a decline in occupancies, primarily as a result of the increase in room inventory within Colombo in the calendar year 2017. However, the year-on-year total number of room nights occupied in the city had increased by 6%, demonstrating the steady absorption of new room capacity.

In Chairman’s review JKH head Susantha Ratnayake notes that with new capacity expected to come on stream over the next few years, especially into the city, it is important for the country to improve its overall tourism product and entertainment offering to attract the higher spending tourists.

“In this context, Cinnamon Life, with its unique offering, will lead the repositioning of Colombo as a high-end destination” Ratnayake points out in his review adding that the Sri Lankan Resorts segment recorded an improvement in occupancies despite the increased competition within the sector.

He further adds that the Maldivian Resorts segment recorded an improvement in average room rates, although profitability was impacted by lower occupancies and the partial closure of “Ellaidhoo Maldives by Cinnamon” for refurbishment.

“However, occupancies at our hotels in the Maldives remained above the industry average during the quarter under review” Ratnayake notes.

- Reporting by Devendra Francis