Citrus Leisure PLC recorded a revenue increase of over 200 percent in 1Q FY2016 compared to 1Q FY2015 as Waskaduwa Beach Resort contributed Rs.100 million to the top line, accounting for 62 percent of total revenue.
Waskaduwa Beach Resort, the largest in the Citrus chain, began commercial operations in June 2014; the addition of its 150 rooms brought the group’s total room inventory to 240. Despite being new on the tourism landscape, Waskaduwa recorded a satisfactory level of occupancy of 44 percent while Hikkaduwa achieved an impressive 62 percent occupancy during the quarter under review, which is normally considered the off-season in the tourism calendar. Gross profit margin improved to 69 percent in 1Q FY2016 from 67 percent in 1Q FY2015 largely due to higher GP margin achieved by Waskaduwa at 71 percent. The management expects GP margin to further improve in the future with the anticipated higher level of occupancy at Waskaduwa in line with the annual seasonal increase in the expected tourist arrivals.
Citrus continues to grow room portfolio, enters city hotel segment
The room inventory of the group went up to 240 in 1Q FY2016 compared to 90 rooms in 1Q FY2015. Waskaduwa Beach Resort added 150 five-star graded rooms to the portfolio including 140 Superior Rooms, six Deluxe Rooms, one junior/family Suite and one Presidential Suite. In June 2015, the group also entered into a management contract to operate The Steuart Hotel in Colombo, a property owned by the George Steuart group. The management contract reflected the group’s strong commitment towards the tourism sector by adding another 50 rooms to the portfolio from 2Q FY2016. The Steuart by Citrus will operate as a boutique business hotel offering the convenience of its prime location.
New properties expected to reach their full potential
The management believes that the latest additions to its room inventory position the group well to cater to the growing tourist arrivals. Citrus Waskaduwa and The Steuart are expected to break even in the near future in line with their growing popularity.
The overall bottom line of the group has depleted to approximately Rs.128 million primarily due to incremental operational costs incurred by the group’s flagship five-star hotel in Waskaduwa. However, the property in Hikkaduwa has shown an approximately 80 percent increase in bottom line compared to the preceding quarter.
The management of Citrus Leisure PLC is confident that the group will be able to further improve performance owing to efforts being taken by the marketing teams and the additional revenue the group will generate through the new city property. Further, the management is also optimistic that the Government of Sri Lanka will commence the mega tourism development in Kalpitiya in the near future. The group will be one of first major operators in the Kalpitiya Tourism Zone as the management has already submitted a definitive plan to develop a 60 roomed Ayurveda Spa Hotel in Kalpitiya.