COLOMBO: The hospitality arm of premier blue chip John Keells Holdings PLC, John Keells Hotels PLC saw its net profits for the quarter ended June 30, 2015 (1Q15) remaining flat (a paltry 2 percent increase year-on-year) at Rs.130.8 million, as the negative performance from the Sri Lankan operations weighed down on the group, the interim results released to the Colombo Stock Exchange showed.
The earnings per share remained flat at 9 cents. The hotel group which has operations both in Maldives and Sri Lanka saw its Maldivian operations posting a net profit of Rs.203 million recording a 19 percent yoy growth but the Sri Lankan operations widened their net losses by as much as 73 percent yoy to Rs.72.6 million.
Sri Lankan operations’ operating losses increased by 126 percent yoy to Rs.48.6 million.
However, quite notable was the top line of the Sri Lankan operations which grew only 1.9 percent yoy to Rs.977.4 million despite the record number of tourist arrivals published by the Sri Lanka Tourism Development Authority (SLTDA) every month.
This demonstrates that yoy increase in arrivals every month have failed to translate into significant rise in top lines of the formal hotel sector. During the period under review, the total tourist arrivals to Sri Lanka rose 15 percent yoy (or by 45,361) to 351,213 but the question remains how many of these tourists stayed in graded hotels.
It has long been highlighted by the tourism sector specialists that Sri Lanka does not always get high spending visitors and many opt to stay in smaller guest houses and home stay units (informal sector establishments).
The difference between the total number of arrivals and the foreign guest nights of the SLTDA demonstrates that there is a sizable ‘leakage’ factor of tourists who do not stay in the formal sector, fuelling a much faster growth in informal sector stays.
Interim results of John Keells Hotels however did not disclose the occupancy levels during the quarter.
John Keells Hotels is Sri Lanka’s leading hotel operator with a portfolio of 11 hotels and 1,336 rooms in Sri Lanka and Maldives.
Meanwhile, revenues from the Maldivian operations too remained unchanged at Rs.1.39 billion. As a result the consolidated revenue remained flat at Rs.2.38 billion. Gross profit was Rs.1.26 billion.
Sri Lanka’s total graded room capacity in 2014 increased by 11 percent to 18,078 while the occupancy rates rose to 74.3 percent from 71.7 percent in 2013. At the consolidated level, all expenses remained below the same quarter last year except for administrative expenses which rose by a marginal 5 percent yoy to Rs.925. 2 million. Finance expenses declined by 43 percent yoy to Rs.48.2 million as both long and short term borrowings came down by Rs.2 billion. For the financial year ended March 31, 2015, the hotel group made a net profit of Rs.1.85 billion.
The board of directors has declared an interim dividend of Rs.0.30 per share for the financial year 2015/16 to be paid on August 5, 2015.
As of June 30, 2015 John Keells Holdings PLC held 80.32 percent stake in the company while state-controlled private sector pension fund, Employees Provident Fund held 5.39 percent stake being the second largest shareholder.
Otara Gunewardene also has entered the top 20 shareholders with 1.45 million shares.
