Hilton Colombo echoes country’s optimistic outlook: Chairman Cooray

• Hilton Colombo’s refurbishment and renewed product in line with global Hilton brand standards will be the mainstay of Sri Lanka’s bouquet of leisure properties 

Krishantha Cooray, the Chairman of Hilton Colombo’s holding company Hotel Developers (Lanka) Plc, has said the five star property’s performance and potential reflects the country’s optimistic outlook and the world-class brand can compete with best of the best in the industry. 

These observations, as well as a recap of the performance in 2017 and an outline of prospects and plans for 2018, are contained in the Chairman’s Review in the Hotel Developers 2017 Annual Report. Following is the full text of Cooray’s review. 

It gives me joy to present the Annual Report and audited financial statements of Hotel Developers (Lanka) Plc for the 2017 financial year, which coincidentally marks 30 successful years of operations for its leisure property, Hilton Colombo. 

Our journey over three decades has been nothing short of inspirational, with Hilton entrenching itself as a brand that is deeply committed to the long-term sustainability of Sri Lanka’s tourism industry, while setting service standards benchmarks for the rest of the industry to emulate.

As the first international hotel brand to set up operations in Sri Lanka 30 years ago, Hilton Colombo stayed the course during the ensuing three-decade strife in the island, standing as a beacon of comfort for tourists and local guests throughout – the presence of a Hilton brand in the country offering them a reassuring promise. 

Over the decades, despite growing competition, the stellar Hilton brand of service with the support of loyal Hilton patrons has helped to sustain and expand market share.

Now operating in a vibrant post-war scenario, with Sri Lanka increasingly considered a mature democracy and one of the most peaceful places on earth, Hilton Colombo echoes the country’s optimistic outlook. The property is currently in the throes of a magical transformation that will propel Hilton Colombo to new heights, leagues ahead of the latest international hotel brands entering Sri Lanka. It gives me great pride to announce that the initial phase of refurbishment was successfully completed during the year under review, which encompassed the lobby and other public areas of the hotel. The new look and aesthetics of the refurbished areas of the hotel have captivated our patrons.

Financial performance

Despite being in refurbishment mode over most of the year under review, the company achieved a revenue increase from Rs. 2.5 billion in the previous year to reach Rs. 3 billion in 2017. Profit after tax increased from Rs. 141 million to Rs. 258 million. For this exemplary achievement, I must thank the enduring commitment of our team and the unstinted loyalty of Hilton Honours members and other local and foreign guests who continue to seek out the Hilton brand of excellence and service. 

Many of our guests affirm that their experience at the Hilton Colombo is unparalleled, making them return to the property again and again. During the year under review, the company ensured strict compliance with industry regulations and good governance practices. The company continues to maintain a strong Balance Sheet coupled with prudent financial management systems and strategic planning. We pledge to remain true to the ethos of Hilton Colombo as Sri Lanka’s beloved brand and icon of its city centre and do everything possible to ensure the property reaches new heights in the hospitality business. Our projections for industry expansion remained solid and I am pleased to note that this was borne out of the fact that the tourism sector proved its mettle once again as one of the mainstays of national economic growth during the year under review. 

We are optimistic that recent measures by the Government to put the national economy back on a growth trajectory will serve the hospitality and tourism sectors well. The foundation has been set for robust economic growth in the months ahead. 

The Government has taken bold steps to establish good governance and transparency. We expect the administration to take similar bold measures to drive tourism. As Sri Lanka emerges as a vibrant democracy and one of the most peaceful nations in the world, the industry expects the Government to take some bold and impactful measures to market Sri Lanka as a destination internationally, to optimise the potential of this emerald isle.

Macro industry and economic backdrop

The tourism industry remained the third-largest foreign exchange earner in the country, despite recording a moderate growth of tourist arrivals in 2017. Meanwhile, Sri Lanka’s real GDP growth decelerated further during 2017 to 3.1%, from the growth of 4.5% recorded in 2016. Although tourist arrivals recorded the highest annual arrivals of 2,116,407 in 2017, the year-on-year growth in arrivals moderated to 3.2%. Flight cancellations and delays at the international airport, due to partial operations at the international airport until April 2017 owing to repairs and the upgrade of the runway contributed in some measure to the sluggish performance in the tourism sector.

India maintained its lead as the prime tourist source, contributing mostly to the growth with 384,628 arrivals in 2017, while China remained the second largest origin albeit recording a marginal decline, followed by the UK, Germany and France. These five largest tourist source destinations together accounted for 51.2% of tourist arrivals to Sri Lanka in 2017.

Despite a lower than expected growth in tourist arrivals, earnings from tourism remained healthy with increased average spending and duration of stay by tourists during 2017. Earnings from tourism increased by 11.6% to $ 3,925 million in 2017, in comparison to $ 3,518 million in 2016.

Tourism earnings are expected to grow steadily over the medium term complemented by targeted promotional campaigns and continued investment in upgrading and expanding tourism-related infrastructure. Several policy initiatives and actions were implemented in 2017 to harness the potential of Sri Lanka’s tourism industry such as the New Tourism Strategic Plan 2017-2020 to facilitate Tourism Vision 2025 and help achieve the United Nations’ Sustainable Development Goals on tourism.

Accordingly, it is expected to raise earnings from tourism up to $ 7 billion, employ 600,000 workers in support industries and increase daily spending per tourist to $ 210 by 2020. Although the tourism sector remains a promising foreign exchange earner of the economy, Sri Lanka has not yet tapped its full potential in the global market.

Globally, the tourism and hospitality sector continues to generate vibrant commercial activity at every level of the international economy, generating revenues in excess of $ 1.4 trillion and accounting for as much as 7% of total exports and 10% of global GDP in 2017. The year under review was characterised by sustained growth in many destinations and a firm recovery in those that suffered decreases in previous years. 

Results were partly shaped by the global economic upswing and the robust outbound demand from many traditional and emerging source markets, particularly a rebound in tourism spending from Brazil and the Russian Federation after a few years of declines.

Future outlook

These developments bode well for the future of Sri Lanka tourism. I commend the ambitious initiatives taken by the Sri Lanka Tourism Promotion Board to sustain and grow momentum in the industry. Hilton Colombo’s refurbishment and renewed product in line with global Hilton brand standards will be the mainstay of Sri Lanka’s bouquet of leisure properties. The completion of the first phase of refurbishment has already augmented our iconic service platform and reiterated that the company has delivered on its promise of an elevated leisure offering to its loyal clientele.

The final stage of refurbishment will commence in 2018 and boost profitability with extensive room refurbishment and new food and beverage offerings to enhance the portfolio of the hotel. I am confident that this strategic investment will further entrench Hilton Colombo as the obvious choice amongst Sri Lanka’s finest hotels while supporting the national vision for the industry.

We have taken cognisance of escalating competition within the industry and believe Hilton Colombo competes strongly on aspects including its location, high level and consistency of service, quality of accommodation, food and beverage options, brand reputation and the Hilton Honours loyalty program, which contributes almost 50% to our occupancy rate. 

Hilton Colombo has maintained its excellent service standards over three decades and the property prides itself on continuous adaption to emerging trends and evolving customer expectations. Our superlative service standards remain our core competitive advantage.

Pillars of our success

The success of our business is linked to the success of our people. Our inspired level of service is emblematic of our dedicated and skilled team of hospitality professionals who consistently exceed guest expectations. 

Our staff is world-class and can easily compete with the best of the best. It is our unique signature Hilton service that keeps our guests returning to our property for every special occasion. Employees who move on from Hilton always find their way back to us, claiming that the world-class training, dignity and warmth they receive in Hilton is something extraordinary. The Hilton brand provides strong career progression supported by a structured talent development training program.

The Hilton Colombo salutes employees who have been standing shoulder to shoulder with the hotel through 30 years. It is their unwavering loyalty that helps us deliver our promise of eloquent service with consistency.

Our Hilton Honours loyal guests must be appreciated for patronising the hotel despite the refurbishment process. Hilton Honors is our award-winning guest loyalty program that generates significant repeat business by rewarding guests with points for each stay at any Hilton property worldwide. Hilton Honors members represented a large share of our room occupancy and contributed significant revenues during the year. 

Further, the hotel remains invested in its local community, conducting an array of social responsibility projects to improve people’s lives. We are committed to having a positive economic and social impact on the communities we engage with. Volunteerism is a big part of our employee culture and Hilton Colombo is proud to inculcate this trait amongst its employees as ideal citizens. 

Environmental responsibility has underscored our three-decade long journey and the hotel has adopted energy efficiency and waste management systems across its operations. It is our way of doing our part to ensure a safer, cleaner more sustainable planet for the wellbeing of all Sri Lankans.

My gratitude also goes out to our clientele, both local and foreign, for seeking out our brand of service, accommodation, culinary experiences, extraordinary customer service and a warm sense of belonging that make our guests feel instantly at home. We are grateful for their support and patronage.

Acknowledgements

Our successful journey spanning 30 years was made possible by the valuable contributions of all our stakeholders. They have loyally upheld the Hilton brand and we salute our guests, partners, suppliers, shareholders and the regulatory authorities for their support and guidance through the years. 

My colleagues on the Board and the senior management and staff have been the pillars of our success. Our people continue to lead our extraordinary service standards, led ably by an excellent General Manager, who has an eye for talent and attention to detail and a habit of going above and beyond the call of duty that allows us to consistently deliver on the promise of our brand. 

Our people are the heart of our operations and they have made Hilton Colombo what it is: a source of inspiration and a warm and inviting space embedded in the collective consciousness of Sri Lankans as their all-time favourite hospitality brand.