La Forteresse (Private) Limited, a fully-owned subsidiary of Dhammika Perera-controlled Fortress Resorts PLC, has invested Rs. 364 million in a subsidiary, to go ahead with its previously planned Rs. 2.1 billion 5-star property in Mirissa.
La Forteresse had made the investment in Alila Hotels & Resorts (Pvt) Ltd to set up a 66-roomed 5-star hotel in Thalaramba, which is located within the tourism hotspot of Mirissa.
Fortress Resorts had disclosed the project in its latest annual report submitted to the Colombo Stock Exchange. The new hotel is estimated to cost Rs.2.1 billion, which includes the cost of land, valued at Rs.345.80 million.
Further capital infusion into Alila Hotels & Resorts is expected through sale of shares, since the market disclosure said that La Forteresse, which owns 99.99 percent of the shares in its subsidiary, will subsequently own 51 percent of the shares in Alila Hotels & Resorts through a dilution.
Business magnate Dhammika Perera, who also controls the Amaya Leisure hotel chain through Hayleys PLC, and who also purchased a hospitality subsidiary of Amaya for a premium last week, had noted in his annual review that Mirissa would become more prominent with Marriott opening a property neighbouring Weligama.
He had said that the new venture would take advantage of Mirissa’s “prospects as a renowmed paradise for whale watching, surfing and other water sports”, and the property would be similar to the one operated by its parent Fortress Resorts in Koggala.
The Fortress Resort & Spa in Koggala had posted a net profit of Rs. 23 million for the second quarter ended September 30, 2016 a 3 percent fall year-on-year (YoY), while for the six months that ended in September the company posted a net profit of Rs. 18.34 million, a 12 percent decline YoY.
The MJF Group which owns the Dilmah Tea brand, and is the second largest shareholder in Fortress Resorts, owns and operates the Cape Weligama resort nearby the planned property.
Sri Lanka’s tourist growth has been exceptional in recent years, albeit below the expectations of the government, and mainly being generated by the budget, informal sector.
According to the latest financial reports, Dhammika Perera, both directly and through various other holdings, controls 53.31 percent of the shares of Fortress Resorts, while the MJF Group and related parties own approximately 28.48 percent of the shares in the company.
The state-owned Bank of Ceylon is the third largest shareholder, owning 1.32 percent of the shares.