KDU Group Chairman Saman Upasena (centre left) and Hilton Southeast Asia and India Operations Vice President William Costley (centre right) exchange the agreements in the presence of (from left) KDU Group Director Thushan Upasena, KDU Group CEO Susantha Pinto, Hilton Asia Development Director Kieran Bestall and KDU Group Director Deelaka Upasena
Pic by Kithsiri de Mel
By Chandeepa Wettasinghe
Global hospitality giant Hilton yesterday signed a 20-year management agreement with KDU Group, a local family-owned tea manufacturer, to manage KDU’s first hotel property, worth Rs.6 billion, situated in Weerawila, Hambantota under the upscale ‘DoubleTree by Hilton’ brand.
“I’m delighted to announce that this will be the first DoubleTree by Hilton operating in the country (and) the signing of Hilton’s seventh hotel this year,” Hilton Southeast Asia and India Operations Vice President William Costley said.
Hilton earlier this year signed an agreement to manage six properties being developed by local steel maker, Melwa Group, with an investment of around US $ 100 million, which would add nearly 800 rooms to Hilton in Sri Lanka.
The partnership with KDU Group would add around 140 additional rooms to the Hilton portfolio in the future under DoubleTree by Hilton Weerawila Rajawaranaa Resort.
Costley said the hotel would begin commercial operations in the first quarter of 2018, since Hilton partnered with a hotel that is almost completed.
The Melwa properties are set to come online in the next two to three years and include a 42-room boutique hotel in Yala, situated near Weerawila. According to Costley, the Weerawila Bird Sanctuary and the hotel’s proximity to three of Sri Lanka’s 10 national parks would cater to wildlife enthusiasts, while the port and airport in Hambantota would attract business travellers and Kataragama would attract cultural and religious tourists to the property.
KDU Group CEO Susantha Pinto said that the first phase of the resort, which includes 80 rooms and other common facilities with an investment of US $ 27 million or Rs.4 billion, is already completed, while the second phase would increase the room portfolio to 140 with a total investment of Rs.6 billion.
He said that the construction cost per room is around Rs.25 million and two similar quality hotels are also planned for the future. “One here in Colombo. With the land that we have I think we can put about a 25-storey building there and the other will be in Dambulla with the lake front,” Pinto said.
Costley’s comments heavily implied that Hilton would likely manage these properties as well in the future.
“I have every confidence that this relationship will further develop as we identify other strategic locations in the country to expand Hilton and KDU’s portfolio of hotels,” he said. Pinto said that the funds for the first hotel were sourced internally, while the other hotels may be funded through the capital market through initial public offerings on the Colombo Stock Exchange in another five years.
“In another few years we’re thinking of listing the company. Some of the kids are studying abroad and once they come back we are thinking of listing some of them (hotels) and raising funds through that. It will be in another five years,” he said.
However, he refused to give an indication of the group’s asset base or profits.
The Hilton DoubleTree brand has 119,000 rooms in over 500 hotels, while the Hilton group has 14 brands, under which there are over 5,000 hotels with over 812,000 rooms.
“We have 345 hotels in the pipeline in Asia and one out of five rooms under construction globally is a Hilton Hotel,” Costley said.
KDU Group is currently engaged in a large-scale diversification effort, branching out from tea manufacturing into food and beverage, hospitality, real estate, hydropower and petroleum.
The business was founded by the current KDU Group Chairman’s father, the late K.D. Upasena, who started a small-scale vegetable distribution business in Bandarawela in the 1950s, before venturing into gem business and ultimately into the group’s core business of tea production.