Serendib Hotels makes provisions for possible losses over Thomas Cook collapse

Serendib Hotels PLC, the hospitality arm of diversified Hemas group, has made provisions for possible non-payment of dues stemming from the bankruptcy of the world’s most iconic travel brand Thomas Cook this September.

Serendib Hotels PLC, which owns and manages Avani Bentota Resort & Spa, Club Hotel Dolphin Waikkal, Hotel Sigiriya, and Lantern Beach Collection Mirissa said in its September quarter (2Q20) interim accounts that it made “provisions for impairment on its total receivables amount due from Thomas Cook subsequent to its filing for bankruptcy in September 2019.” According to the hotel group’s 2Q20 cash flow statement, impairment charges as at September 30, 2019 stood at Rs.11.05 million compared to Rs.1.3 million a year ago. 

Serendib Hotels made negative earnings of 63 cents a share or Rs.69.9 million for 2Q20 compared to a loss per share of 54 cents or Rs.59.7 million reported for the same period last year.
The revenue for the period fell 35 percent year-on-year (YoY) to Rs.292.3 million reflecting the negative impact from the Easter bombings 
in April.

The group recorded an operating loss of Rs.92 million for the quarter under review, a decline of 840 percent compared to the operating loss incurred in the same quarter last year, in spite of the cost saving measures implemented, due to the significant shortfall in revenue. 

Serendib Group of Hotels recorded an average occupancy of 56 percent across its hotels during the quarter, 21 percentage points below the occupancy achieved in the same quarter last year.

“Rates across all properties were dropped during the period under review, to boost occupancy. The Group achieved a TRevPAR (Total Revenue Per Available Room) of Rs. 9,615 for the quarter, a 34 percent decrease from the same period last year,” Serendib Hotels Executive Director Malinga Arsakularatne said.

He also said tourism industry showed signs of recovery during the period of July to September, with the gap in arrivals against the corresponding months last year gradually decreasing over each month. “However, a longer time period is expected for selling rates in the market to revert to previous levels. Consequently, while volumes have begun to gradually pick up at our hotels, selling rates continue to be challenged, causing a downward trend in overall revenue.  Hence, our outlook for the rest of the year remains conservative. Our hotels will however continue its promotional offerings in the next few months to push volumes, while scaling back expenditure; and will seek to capitalize on the upcoming winter season,” Arsakularatne added.

Meanwhile, Serendib Hotels said its shareholding of 5.9 percent in Jada Resorts & Spa (Pvt) Ltd, the owning company of Avani & Anantara Kalutara Resorts, is up for sale.

“Jada Resorts & Spa (Pvt) Ltd is treated as an Available for Sale investment. Hence, the operating results of Avani or Anantara Kalutara Resorts are not reflected in the Consolidated Financial Statements of Serendib Hotels PLC,” an earnings release said.