Losses at John Keells resorts mount during 1Q

John Keells Hotels PLC (KHL) saw the revenue momentum losing in both its Maldivian and Sri Lankan resort sectors during the June quarter (2Q22), reflecting the impact of COVID-19 third wave and the resulting restrictions on travel and leisure activities. 

KHL operates a portfolio of 12 luxury resorts in Sri Lanka and Maldives under the ‘Cinnamon Hotels & Resorts’ brand.

The group reported revenues of Rs.1.54 billion for the quarter under review compared to Rs.47.4 million in the year earlier period as all travel and leisure activities came to a grinding halt for a prolonged period in the corresponding quarter in 2020. 

However, the June 2021 top line marked a sizeable decline from the revenues it generated in the previous quarter ended in March 2021, which was recorded at Rs.2.02 billion, when the Maldivian tourism sector was fast recovering while the Sri Lankan resorts were increasingly patronised by domestic travellers who began taking trips after almost a year of sheltering-in-place.

Re-opening of borders for international air travel little helped during the first half of 2021, as the arrival of foreign visitors was slower than expected. 

Maldivian resorts sector witnessed some level of moderation in terms of visitors with the fresh outbreak of the virus in India, as India is a one of the key tourism source markets for Maldives.  “All resorts in Sri Lanka are on hibernation mode due to health and safety guidelines and restrictions issued by the Sri Lankan government.

Resorts in Maldives operate whilst adhering to the regulations issued by the authorities,” KHL said in a note to its interim financial statements.  As a result, the revenues form the Sri Lankan resort sector declined to Rs.241.4 million in the June 2021 quarter compared to Rs.322.2 million in the March quarter in 2021, while the revenues in the Maldivian resorts fell to Rs.1.29 billion from Rs.1.70 billion in the March quarter. 

However, the group expects pent-up demand for travel and tourism once travel restrictions are removed.
Meanwhile, the refurbishing of Hikka Tranz by Cinnamon and the construction of Cinnamon Red Kandy are expected to recommence during 2Q22 and 2H23 respectively, while the group expects to make the most of its Cinnamon Bentota Beach after its re-opening as the border closures prevented realising its full potential at the time. 

KHL reported a loss of 84 cents a share or Rs.1.23 billion for the quarter under review compared to a loss of Rs.1.73 billion or 1.18 a share a year ago. 

The group narrowed its losses in its fourth fiscal quarter ended in March 2021 down to Rs.781.6 million or 53 cents a share. As of June 30, 2021 John Keells Holdings PLC had 80.32 percent stake in KHL while the Employees’ Provident Fund had 5.39 percent being its second largest shareholder.