Lankem Into Hotel Expansion
The Rs. six billion turnover Lankem Group of Companies through land held by its subsidiary York Hotels (Kandy) Ltd. in Kandy and land in the Trincomalee coastal belt held by another of its subsidiaries, plans to develop such real estate into hotel properties.
Anushman Rajaratnam, Managing Director Lankem Ceylon PLC told The Sunday Leader on Tuesday that acquisition led growth may be too expensive a proposition to follow due to high market prices prevailing at present.
This diversified blue chip company already has 300 hotel rooms under its command vis-à-vis some four developed hotel properties under its belt.
In anticipation of larger tourist arrivals this winter because of the end of terrorism in the country, the company has upped its room rates by 33% to US$ 80 a room for the forthcoming season.
Rajaratnam said that they may also develop their existing hotel properties for 2011 winter, so that they would then be in a position to demand a premium on their rooms.
“Arrangements with our agents preclude us from undertaking any development works while guests are present, that’s why refurbishment works are out this winter,” he said.
Lankem’s hotel properties include Sigiriya Village, Marawila Resorts, The Palms Beruwela and Weligam Bay.
The company previously had plans to go into hotel investments in India, but with the dawn of peace they have shelved that idea and are now concentrating on such developments in the island.
Infrastructure development such as a good road network is sine qua non for hotel development, the company’s Director/CFO K.P. David said. A tourist doesn’t fancy spending some six hours on the road to go to the East from the airport, he said.
But the private sector will latch on to such infrastructure development, said David.
The Group is also into plantations, detergents, agro and industrial chemicals, bituminous and consumer products, FMCG and paints and serves some well known international brands in the local market.
The company early this year acquired a controlling stake in CW Mackie & Company PLC for Rs. 700 million.
“If that acquisition was to have had been made now, the cost would be double that amount as per current market prices,” said Rajaratnam.
Lankem aims at passing the Rs. 16 billion turnover mark in the current financial year ending on March 31, 2011; nearly thrice the turnover of Rs. six billion made in the immediately preceding financial year ended March 31, 2010.
The envisaged accelerated growth is due to Lankem per se’s topline expected to grow by 20% year on year, coupled with the contribution to be made by CW Mackie, its new subsidiary,which is into rubber products, Scan fruit drinks and marine paints, to the Group’s topline.
Lankem has also invested in Asparagus plantations, where, earlier, they were looking at the export market, but with peace and the influx of tourists to the island, they are now looking to supply this produce wholly to the local market.
Lankem is a subsidiary of Colombo Fort Land & Building Company PLC, a Rs. 20 billion company, and which subsidiaries also include EB Creasy and Darley Butler.
