Hilton Colombo marks milestone year; Chairman says excellent future prospects

• 2016 revenue tops Rs. 2.5 b mark; pre-tax profit up by 24% to Rs. 173 million 
• Encouraged by the successful completion of the first phase of $ 34 million refurbishment, Hilton to commence next phase in third quarter of this year

Chairman Krishantha Cooray

Hilton Colombo has marked a milestone year in 2016 and with ongoing enhancements along with the improving profile of Sri Lanka for tourism, the Chairman of the owning company Hotel Developers (Lanka) Plc, Krishantha P. Cooray, has expressed confidence in excellent future prospects.

Some of the highlights of the milestone year as well as insights into the future prospects were shared by Cooray during the Chairman’s Review of the 2016 Annual Report of Hotel Developers (Lanka) Plc, which held its AGM on 31 August. The company has not carried out any major refurbishment on the hotel since its inception and a major refurbishment program worth $ 34 million is ongoing, which will see improvement across the property including with its rooms, food and beverage outlets and meeting spaces. Here are excerpts of the Chairman’s Review. 

The company has reached a significant milestone during this period by concluding the first phase of the refurbishment and progressively opening for operation from October 2016. It is also commendable to note that your company, despite the ongoing refurbishment, continued to operate in a seamless manner during 2016. It is important to emphasise the fact that Hilton Colombo has worked relentlessly to curate unique service propositions with the utmost fidelity to the global Hilton brand experience. As a result of these committed efforts, we were able to successfully meet our revenue targets as reflected in our financial performance for the year ended 31 December 2016.

The Hilton team, our stakeholders and the industry at large are elated about the ongoing refurbishment because it promises to be revolutionary in nature and concept. Ideas from international hotel consultants of classic yet modern designs have been incorporated to sustain the competitiveness of the Hilton brand in the local tourism industry. 

The completion of the first phase of refurbishment has already augmented our iconic service platform and will serve as a springboard for future growth. I believe that this strategic investment will further entrench Hilton Colombo as the preferred brand amongst Sri Lanka’s finest hotels. I am pleased to note that the tourism sector yet again proved its resilience as one of the mainstays of the nation’s economy during the year under consideration.

Global tourism movements

Globally, international tourist arrivals touched 1.2 billion in January 2017 as reported by the United Nations World Tourism Organization (UNWTO) in the World Tourism Barometer, reflecting a 3.9% growth, with 46 million more tourists travelling internationally compared to 2015. 

Meanwhile, Asia and the Pacific recorded an 8% growth, spearheading the boom in international tourist arrivals in 2016. With a 12% increase in spending, China continued to lead international outbound tourism within this region, followed by the US, Germany, the UK and France.

Performance of local tourism industry

Sri Lanka recorded a staggering two million tourist arrivals in 2016, indicating a 14% growth, making the island nation a top tourist destination. Against a backdrop of a marginal growth of 4.4% in GDP, the services sector contributed 57% to Sri Lanka’s GDP in 2015. 

According to the Central Bank of Sri Lanka (CBSL), the earnings from tourism increased significantly to Rs. 512,293 million in 2016 compared to Rs. 405,492 million in 2015. This marked increase signifies a growth of 26% generated by the continued increase in tourist arrivals as well as increased spending by tourists. On average, the total number of nights spent by a tourist during the year showed an increase by 15% to 20,918,486 nights, with an average duration of 10.2 nights. Tourists from Western Europe dominated the sector, showing a 16.5% growth over the previous year to record 643,333 arrivals. India continued to be the leading contributor to Sri Lankan tourism with 356,729 arrivals in 2016, reflecting a 17% share. In line with global travel trends, China also contributed significantly to the growth in arrivals in Sri Lanka with a share of 13.24%. Thus, India and China account for almost one-third of the total tourist travel to the country.

I commend the creditable initiatives made by the Sri Lanka Tourism Promotion Board to fuel a sustainable upsurge in the industry with a strong investment-centered focus and also in enhancing the country’s image through strategic marketing endeavours. I am confident that the strategic investments being undertaken by your company will support the national vision for the industry. 

Furthermore, with the ongoing development of the Port City of Colombo and other mega infrastructure investments being undertaken by the Government of Sri Lanka, Hilton Colombo, with its strategic and iconic presence, is expected to play a pivotal role in supporting the growing inflow of tourists.

Financial performance

Your company sustained a revenue level of Rs. 2,541 million in 2016. Although only 87% of the rooms were in operation, the refurbishment strategy deployed ensured the delivery of the popular array of services that our customers seek from the Hilton brand without any curtailment or closure.  The room revenue in fact increased to Rs. 1,152 million, proudly reflecting a year-on-year growth of 27%. The company earned a Pre-Tax Profit of Rs. 173 million for the financial year ended 31 December 2016 (in FY15 it was Rs. 139 million). I wish to reiterate that during the year under review, your company has ensured compliance to stringent financial management controls. 

Our corporate governance structure is emblematic of our inbuilt ethical systems and processes. In this regard, your company has consistently achieving the Compliance Award issued by the Institute of Chartered Accountants of Sri Lanka, for the last four consecutive years.

It is admirable to note that the first phase of the refurbishment project has been funded primarily through its internally generated funds from hotel operations, whilst the refurbishment is ongoing without utilisation of the approved bank loan. The company’s financial stability has been maintained through prudent financial management and conscious strategic planning. We are optimistic that the adequate returns will accrue to enable us to recover the investment of the refurbishment. This has given us the necessary impetus to invest in future expansions to enhance the existing array of accommodation and elite venues at the hotel.

Our team: key to our success

I am proud to highlight the achievements of the Hilton Colombo team during the year under review for demonstrating seriousness of purpose and a fierce loyalty to the hotel, which is the X factor that differentiates our hotel from others. We are blessed to have an exceptionally brilliant staff with a wealth of knowledge of the industry and a customer-centric mindset which is highly valuable.

Our large number of long-serving employees reflects their faith in the company and in sustaining the Hilton Colombo brand at the forefront of the industry. We remain proud of the fact that all our staff was retained despite a large extent of the hotel being under refurbishment, which reflects just how much the company values its employees.

Our talent management systems and processes give us a clear competitive advantage in the industry. As testimony, Hilton won the gold for the Best Multinational Corporation in Sri Lanka based on a study conducted by ‘Great Place to Work Institute’ in partnership with the ‘Ceylon Chamber of Commerce’ and ‘LMD’. The hotel was also bestowed with the silver award for the Best in Large Sized Enterprise Category and adjudged one of the top 25 companies in ‘Sri Lanka’s Best Companies to Work for’ rankings.

Hilton Colombo

Excellent future prospects

Over the years, Hilton Colombo has maintained its signature blend of opulence and refinement and, more importantly, sustained its presence in the country before, during and after the war. Our unique positioning as the premium venue of choice for Sri Lankans celebrating special occasions has been consistently maintained across three decades. We have hosted the most prestigious conferences, seminars and other national and global events since inception. These achievements bear testimony to our superlative service standards and unparalleled five-star hospitality, which is our core competitive advantage and unique selling proposition.

Encouraged by the successfully completion of the first phase of the refurbishment, we are now poised to commence the next phase in the third quarter of this year. On completion of the second and final phase, our patrons can look forward to an expansion of banquet services to boost our MICE (Meetings, Incentives, Conferences, and Events) business, which has been the pillar of our sustained revenue base along with fully-refurbished rooms and restaurants to meet diverse local and global demand. These extensive capital investments will enhance the property and help sustain its iconic presence in a dynamic and fast-evolving sector. Your company is now ideally positioned to harness the opportunities of a growing tourism market.

The Board of Directors of Hotel Developers (Lanka) Plc comprises Krishantha Prasad Cooray (Chairman), Dheeshana Ameresekere, Athula Senanayake, M.U.P. Jayamaha, Pravir Samarasignhe, Sonali Liyanamana, Tehani Mathew, Dhanuka Ranjith Samarasinghe, Shezmin Mansoor and Dinouk Colombage. The Competent Authority is C. Ramachandra and the Advisor to the Board is V. Kanagasabapathy.