John Keells’ city hotel profits down

John Keells Holdings PLC’s (JKH) subsidiary Trans Asia Hotels PLC, owners of Cinnamon Lakeside Colombo, saw its net profit declining to Rs.121.5 million for the three months ended June 30, 2013 (1Q14) as against Rs.158.1 million during the corresponding period of the previous year, interim financial accounts released to the Colombo Stock Exchange revealed.

Revenue for the period under review stood at Rs.612.9 million which was down 5 percent year-on-year (YoY) while gross profit for the quarter fell 10 percent YoY to Rs.366.6 million.

Further, administrative expenses increased 5 percent YoY to Rs.149.5 million during the three months under review.

Net finance income of Trans Asia Hotels stood at Rs.19.1 million during the quarter under consideration as against Rs.12 million during 2012.

Earnings per Share for the period were 61 cents in contrast to 79 cents during the corresponding period of the previous year.

However JKH Chairman, Susantha Ratnayake stated that occupancy continued to be strong in the city hotels where JKH increased its market share.

Ratnayake pointed out that while overall tourism arrivals to the country continue to demonstrate growth, they have not translated into room nights in the star category hotels.

“This, we believe, is the result of a combination of the economic issues in Europe and the lack of a focused destination marketing and branding strategy,” he noted.

JKH’s leisure sector profit before tax of Rs.461 million for 1Q14 saw a decrease of 29 percent over the first quarter of the previous financial year. This according JKH Chairman, was primarily a result of the lower than expected performance of Sri Lanka resorts with the new resort, Cinnamon Bey, in particular, still being established in the market.

“Additionally, there was an impact on lower interest rate bearing foreign currency denominated loans as a result of a depreciated Sri Lankan rupee at the end of the quarter,” Ratnayake noted.

(KP)