John Keells Hotels PLC, the resort sector arm of the John Keells group, produced yet another disappointing quarterly performance as three of its resorts – two in the Maldives and one in Sri Lanka – were closed for refurbishment.
John Keels Hotels, with a combined room inventory of over 1,200 in 10 properties across two islands, in the Maldives reported a loss per share of 18 cents or Rs.263 million loss for the quarter ended on June 30, 2018 (1Q19), as the revenues fell while the non-recurring impairment erased the bottom line.
The consolidated revenues from the seven hotels and 864 guest rooms in Sri Lanka and three hotels and 340 guest rooms in the Maldives was down 11 percent during the quarter to Rs.2.1 billion over the same three months last year.
On July 1, 2017, Bentota Beach by Cinnamon was closed by the company for complete redevelopment and is slated to be opened only in November 2019.
Meanwhile, on May 1, 2018, the company also closed its Maldivian resort Hakuraa Huraa for refurbishment.
In June 2018, the company partially closed another Maldivian resort, Ellaidhoo Maldives by Cinnamon, for refurbishment.
The company said as of June 30, 2018, it had contracted but not incurred capital commitments of Rs.3.08 billion, US $ 3.4 million and US $ 0.7 million for the three properties, respectively.
The company further has approved but not contracted capital commitments of Rs.3.72 billion, US $ 7.7 million and US $ 0.3 million for its Nuwara Eliya Hotel Project and the two Maldivian resort refurbishment projects, respectively.
Meanwhile, due to the closure of the Cinnamon Hakuraa Huraa Maldives resort, the company had to recognize a non-recurring expense of Rs.154 million arising from an impairment of non-financial assets attached to the property.
Further, the company’s administrative expenses for the three months also included the effect of acceleration of depreciation arising from the closure of Bentota Beach by Cinnamon, the company said in a note accompanying the interim results.
Earlier, John Keells reported depressed financial performance of its city hotel sector due to the increase in competition in the sector.
John Keells Holdings PLC has a 80.32 percent stake in John Keells Hotels, while the Employees’ Provident Fund held another 5.39 percent stake being the second largest shareholder in the company, as of June 30, 2018.