Hoteliers still coming out of the woods on loan repayment

Sri Lanka's hotel industry is currently coming out of the financial struggles as at least 70 per cent of them are learnt to be out of the woods and paying off their loans and only about 30 per cent are still struggling.

A senior hotelier told the Business Times that only about 30 per cent of the hoteliers are still struggling with the repayment of their loans that were granted a moratorium. Out of this 10 per cent have not utilised it properly and the balance 20 per cent are struggling genuinely, it was pointed out.

However 70 per cent of the hoteliers that are paying off their loans are in good order and would be those that have been able to carefully manage their finances, it was noted.

Founder of Connaissance De Ceylan hotelier Chandra Wickramasinghe told the Business Times that banks have restructured loans on a case by case basis and since these were done without considering the 18 per cent VAT component, there is a possibility that this too will be added leading to an increased amount on the rescheduled loans.

Moreover, he explained that since banks were rescheduling loans for only about eight years hoteliers are finding it difficult and would prefer it to have been extended for longer time period.

It was also found out that banks are facing an issue more so due to the fact that some hotels were not operating and are considered the biggest burden on the banking sector.

SMEs and medium sized companies are struggling whereas the conglomerates are doing well and which the banks consider to be low risk, it was noted.

Another concern for hoteliers are the dollar loans obtained that has caused most of them to now pay back at current rates as opposed to rates like Rs.165 on the dollar back when they obtained the loans.

In this respect, hotels are struggling to come out of the crisis as they are now burdened with increased rates even when they want to convert their dollar loans to rupee loans, Mr. Wickramasinghe said.