Sri Lanka JKH Hotel to Raise Rs3.6bn to Expand as the Country Expects a Surge of Tourists After the End of a 30-Year War

21st January 2010, www.lankabusinessonline.com

The leisure unit of Sri Lanka's John Keells Holdings group is making a 3.6 billion rupee cash call to spruce up its hotels and build new ones as the country expects a surge of tourists after the end of a 30-year war.

The company said it was issuing 364 million new shares at 10 rupees each to shareholders in proportion of one for every three shares held.

"The proceeds of the Rights Issue will be utilised to fund the refurbishment of hotels in Sri Lanka as well as for new hotel projects and for the acquisition of land for new resort hotels," the group said in a statement.

JKH has earlier said it was planning to invest nearly 6.0 billion rupees during the next three years to refurbish its hotels and build new ones.

It is planning a 190 room hotel in Beruwela on which design work would be finished by next April.

The hotel is expected to cost around 1.7 billion rupees, and will be a 4-star rated hotel coming under the group's mid-market 'Chaaya' brand.

JKH has a 10-acre long stretch in Beruwala, after it bought land from Sri Lanka's Confifi group next to an existing property. JKH's Beach Hotel Bayroo, in Beruwala was damaged during the 2004 Indian Ocean Tsunami.

JKH closed its 80 room Club Oceanic Hotel in the Eastern coast of Trincomalee, to refurbish it at a cost of 400 million rupees as a 4-star rated property.

Bentota Beach Hotel, would also be refurbished towards the end of next year at cost of 800 million rupees. The 115 room property would be 5-star rated.

"If tourism arrivals increase we will be ready with rooms," Gunewardene told a forum organized by Leopard Capital, a private equity group in Colombo last year.

"Cambodia saw an exponential growth after the unrest ended. Arrivals grew from 557,000 in 200 to 2.1 million in 2008".

Sri Lanka’s annual visitors in 2009 grew from 447,890 as opposed to the 438,000 visitors from the year earlier.

By 2011 JKH would be ready to start a 100 room 5-star hotel at its existing land in Ahungalle in the south west coast. The project may cost 1.6 billion rupees.

It could also build another 4-star 120 room hotel in the East Coast on its existing or acquired property. JKH had access to property in Kuchchaveli as well as in Nilaveli.