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Kalpitiya Dutch Bay Resorts, the first initial developers to complete Phase I in what is known as the largest tourism development project – Kalpitiya Tourism Promotion Zone is set to open their 17 villa property early next month targeting high-end tourists from all over the world.
Investing US$3.5 million (excluding the land cost) under the first phase of development, the resort is a unique hideaway for travellers as it overlooks the 
longest reef in South East Asia. Having laid the foundation stone on 09 September 2009, 10 acres of land within a total 184 acres acquired on freehold basis is now ready for occupation and the management is confident about achieving 30-40% occupancy within the first few weeks. This is also said to be one of the largest beach-front developments in the Indian Ocean.
Dutch Bay Resorts Director Marketing and Promotion Neil D’ Silva in an interview with Daily FT commented on the development, on plans ahead, and the Six Senses chain coming in to Sri Lanka.
Following are excerpts from the
interview:
By Cheranka Mendis
Q: What made you pick Kalpitiya for a development project?
A: In 2004/2005 we were looking into development opportunities and visited Sri Lanka as we heard of an island for sale by a private group of people. We realised the potential of this rich and beautiful biodiversity in the Northern Western coast of the country and wrote to the Government of our interest in buying the land on free-hold basis. At that time there was a Gazette notification to acquire all land under high-end resource development of Sri Lanka. We bought the land directly from the private owners.
However Kalpitiya is tremendously unpopular in land and due to many land grabbers that do various land deals based on false deeds and false survey plans, we are still going through some issues such as clearing up the boundaries. Due to this we acquired a large piece of land so that we don’t have any neighbour’s living close to us.
Q: When did work for Phase I commence?
A: In 2011 when we got the approval we decided that we will go ahead and break ground to start Phase I. We have broken up the whole development into phases only because we had to deal with a lot of issues with the local the fisherman, land grabbers, etc.
As an example, if US$100 million were put into the development and we had delayed it for a year we would have been at a major loss. If we faced all the issues that we faced in Phase I which is only 5% of the development on the total development we would have acquired major losses and would not have been able to see the completion of the development
Luckily the project was at a palatable level of financial investment because it was a financial facility and a joint venture sort-of-agreement with Bank of Ceylon for Phase I.
Q: What steps have you taken to sort out issues with the locals inhabitants?
A: We had constant public relation meetings with them. They were trying to stop this development because they thought we were going to steal the livelihood of the fisherman. But that has never been our intention. We explained that from what we do, their productivity will be increased and they will be able to catch more fish and sell it to the hotel so that one day their children will wear Nike shoes and carry battery operated laptops. They even called the BBC. We are trying to develop a sustainable resort development in very rich biodiversity; they couldn’t understand it for awhile. The very same people who protested against us 20 months before are now working for us. 98% of our workforce is from the area.
Q: Tell us about Phase I and what it entails?
A: Phase I consists of 17 mangrove chalets facing the lagoon which is on the North Eastern side of the property; the Indian Ocean is about 1.2 km toward the Western Coast. The chalets are built in a way that it becomes a spa for the guests. It is a hideaway retreat. It’s a rejuvenation destination where you and your partner stay on the ‘Kumbuk’ balcony and the masseurs and therapists will come and give you spa treatment right on your balcony. It is a place where you don’t have to go to a spa and get ready, take a shower and walk back. We encourage our guests to actually utilise the closed space within the chalet as their spa.
We have a five-star kitchen, a five-star restaurant and a common swimming pool. Apart from that we have created facilities for the guests on the beach. We have boating facilities where we will pick them up from the Puttalam lagoon and take them to our island by boat. Seaplanes can land on our lagoon. The floating jetty has been made for dual purposes – one as a floating deck for yoga in the morning and a jetty for sea planes during the day time.
We have a ‘theppuma’ and the guests will sit under the shaded ‘theppuma’ and a local will take them to the chalets. It is the lifestyle of the fishermen in the Kalpitiya area that we want to enhance.
We also have a butler service where we have taken 8-10 local women who have previously been housemaids overseas from the area. They are now our ‘butler ladies’ and have been trained for the role. Each of them has a chalet they are solely responsible for. They will be given the same salary that they got overseas but with no physical risks. It is also our way of saying ‘thank you for bringing the country so much revenue and this is our payback time.’ Guests will be pre-advised on this and would be told to excuse them if they are not as fluent in English as they are with Arabic. These ladies will be your personal butlers and would serve you at the restaurant, ensure you enjoy your holiday to the utmost and will only be off duty once you’re tucked in bed after a relaxing foot massage.
Q: How ready are you for the launch?
A: We’ll launch early next month. We have got inquiries already. We want to get very minimal reservations initially. But towards end of April or May, we should get around 30% - 40% occupancy. Since we lived overseas we have a great database and the word is now going around. We have already started advertising in Bahrain, so we are expecting a lot of Arabs. We pick our guests up either in Colombo at their doorstep or Katunayake Airport in our wonderful jeeps and/or caravans. We have a butler in the caravan who will stop half way through and cook you a nice meal and take you to the Puttalam pier, from there we will take you on a speed boat. The journey begins at your doorstep. The caravan will have a television, oven, sofas, a bed for two, and a shower.
Q: What about Phase II?
A: Phase II is where the actual fun begins.
An exclusive Hawaiian university has been given a green light to come and establish a university at the site to train Sri Lankans keeping in line with international standards in Kalpitiya while foreigners have to come here and pay the Hawaiian price. The idea is for Sri Lankans who do not have the money to go to Hawaii, to come to Kalpitiya and get a similar world recognised diploma. Our staff training is covered by the developer. The school uses the resort as a training centre, so my guests will be looked after by the trainees supervised by the instructors. Their salaries are given to the school so that the school will receive funding to train the local people. The staff accommodation will be turned into a hotel school.
Under Phase II, the resort will also get a banquet hall for MICE. Our intention is to cater to high net worth individuals such as royalty etc, as well as target organisations such as Lonely Planet, Discovery Channel, etc to conduct their annual events here.
We will also name it ‘An exclusive time share concept’ which would give us the privilege to build 32 – 40 more villas.
In this Phase we will also begin to construct a Dutch fort of approximately 80,000 Sq.ft. based on the old footprint of the Kalpitiya fort.
We have allocated 36 months for the completion of development under Phase II.
Q: Let’s talk about Phase III?
A: Phase III will be a yacht club and a marina to attract all the wealthy Arabs and the Europeans who park their yachts in very busy places such as Monaco and Nice. We want to pull them to Sri Lanka as we have great retired Navy staff that can look after the marinas. Wealthy Pakistanis and Indians park their yachts in Dubai and they have to pull it out every year, they can now park in Sri Lanka. Cruise liners used to patronise Sri Lanka before the war and they have started coming in again.
We need to educate the local fisherman on safety precautions they should take when taking guests and the distance they need to keep when they go on whale/dolphin watching tours. They have to be cautious when approaching coral reefs. According to Australian divers Kalpitiya reef is not second to the Great Barrier Reef.
We have allocated 36-48 months for the completion of this.
Q: What about the investments?
A: The Phase I investment excluding the land cost was US$3.5 million. The land cost today is valued at US$200,000 an acre. But no foreigners can buy anymore, so it will go further up in value. Phase II excluding land cost is approximately US$48 -50 million.
Q: When will work in Phase II start and when will the whole project be completed?
A: We have completed and received the EIA approval on drawings and building plans. We would like to break ground very soon as our tax holiday period starts soon for operating Phase I. If everything goes well we will break ground by the end of this year. By 2016 we expect the majority of the project to be completed.
Q: What could you tell us about Six Senses and their interest in Sri Lanka?
A: Six Senses are in love with our land and concept. There has been a little change in the stakeholders’ ideas. They came down to lay the foundation stone but 17 chalets are too small for them to manage. I will open the books again when I start phase II.
We have a large piece of land and our plan is to have 4-5 hotels so they will always have a place there.
Q: How sustainable is your development?
A: For me sustainability and tourism is like oxygen; it goes hand in hand. Sustainability is about protecting the rich biodiversity and the environment for our next generation. It is a respect to our mother earth. Tourism is an education of our mother earth and an education to those underdeveloped villages and countries where wealth could flow into – where the poor kids could have tools for education, hospitals could get better equipment, etc. There is a greater connection between sustainability and tourism.
We want to bring out the rich historical values of Kalpitiya. Dutch Bay is an old colonial island, named by the early Dutch settlers. Even Holland doesn’t have a location called the Dutch Bay. So we always say that every grain of sand at Dutch Bay has a great story to tell you. And that’s the story we want to bring out. It is an appreciation for our early Dutch settlers and to show how pristine our beaches are, and to show how the profit models can co-exist with the poor people, bringing the source-to-economical factor on par with the profit models of the hotels here.
The success of a development is not measured by how profitable it is to us. Instead, it’s on how profitable it is to the people living in that area and how profitable it is to the target market.
Q: What have you done to ensure environmental sustainability?
A: Once the project was approved we did an extensive Environmental Impact Assessment (EIA) covering the rich biodiversity, vegetation, history of the land and history of the building. We hired EML Consultants to do an environmental fact assessment with beautiful guidelines related to protecting and integrating the rich biodiversity. We worked on it for two years and presented it to ministries and relevant authorities such as the Forestry Department, Central Environment Authority, Coast Conservation Directorates, POI and Tourism Ministry.
Mangroves needed to be protected from day-one and the privacy that you create from a mangrove villa to a mangrove chalet must be ensured. We would like our guests to have their privacy from the balcony, so that no one can see them from the lagoon. But, if you want to see a glimpse of the lagoon, the lagoon is underneath. It is our duty to understand the mangroves carry rich biodiversity. The best lobsters, the best crab that you eat in Colombo restaurants come from our lagoon.
Our EIA process to build the hotel is a continuous process. From this month onwards, we have a representative of the environment management team at site. His job is to ensure that the rich biodiversity is diversified and to ensure that the required vegetation for landscaping is not brought from outside but internally root ball instead.
Because it’s a sustainable resort we can’t destroy water; we reuse water. With the discharged salt water we get, we do a reverse osmosis and the discharged water is mixed with the sewage treatment plant water. We reduce the salt content and use it for our golf course which is of Bermuda grass and is salt tolerant. This is coming in Phase II. We also use this water for agricultural purposes.
Q: What should the country do to attract more large scale developers?
A: Sri Lanka is a destination. It is not just a country, but a whole package. It has history; it’s got the colours, a rich biodiversity, cultural diversification, various food patterns to cultural patterns, and is blended with a history which makes Sri Lanka have the longest written history to date.
How can I convince people to come to Sri Lanka and join me on a luxury development? It is still hard because we have lot of other areas that we have to polish before the affluent traveller comes in; before we receive the full-swing FTI. We have to ensure investor security – how secure are our assets in this country and how well appreciated are the assets in terms of real estate?
If you look at Colombo as an example; a perch is going from about Rs.1 million to Rs.7 million. But what is the rich biodiversity in Colombo? There is nothing; it’s a polluted city. I think the most polluted part of Sri Lanka is Colombo and it is congested. Now Kandy is getting overpopulated as well. We need to spread this infrastructure. Developing Hambantota is a great idea because then you’re spreading the wings of the people. We have to stop this micro and macro-level mushroom development.
Banks appreciate the land value in Colombo which is in a congested city but why don’t the banks, specially the state banks, understand the rich biodiversity and historical values of places like Kalpitiya or Jaffna?
Today the affluent traveller wants to step on to a beach where there are no people. They want to pick up a shell. If you can find 10 shells of an area of about 10 square meters then that beach is very rich in biodiversity. But if you go to down South can you find shells even if you walk a mile?
The internal banks in Sri Lanka must understand this and appreciate the value of our mother land.
