The going is good, says Galadari GM

Friday, 8 June 2012 02:48 - - {{hitsCtrl.values.hits}}

By Cheranka Mendis

Galadari Hotel is doing well operationally despite the negativities in the market and targeting Rs. 2 billion revenue at the end of the coming financial year.

Closing 2011 with Rs. 1 million profit, the hotel is now looking at refurbishment and possibly a complete revamp of the hotel if the debt equity swap is given the okay from the SEC.

Galadari Hotel General Manager Sampath Siriwardena (left) speaking of the good times ahead for the hotel while Assistant Financial Controller Nilusha Duminda Femando and Financial Controller Upali Perera look on – Pic by Daminda Harsha Perera

Assuring that all is well in the hotel, General Manager Sampath Siriwardena yesterday stated that growth in revenue has recorded an increase YoY while bottom line profits have also seen an upward shift.

He also added that with speculation rife that the hotel is up for sale, several interested parties have come forward to acquire the hotel, among which were three local buyers. “What we intend to do in the immediate future is clear out the loss issue that has put the hotel in a negative light,” he said.

The unaudited financial statements of Galadari Hotels (Lanka) Plc for the quarter ended 31 March 2012 disclose that the company is currently facing a serious loss of capital with stated capital at Rs.1,824,340,604 and net assets at Rs.530 million. The main cause for the loss is foreign exchange losses of Rs. 733 million as at the quarter ended 31 March 2012.

“The cause is the depreciation of the Sri Lanka rupee against the US Dollar by Rs. 13.85 from 31 December 2011 to 31 March 2012. Hotel’s Financial Controller Upali Perera explained that share capital was eroded more than 50% to cause the serious loss of capital. Because our loans were taken from Galadari Brothers on a US$, with the exchange rate changes, converting the dollar loan to SLR has a huge exchange loss. The next major issue is to convert the loan into equity.”

He noted that Galadari Brothers Company (LLC), promoters and owners of the company have agreed to forego their loan and convert the loan into equity. Exchange loss and interest will then go off. “As soon as we get the Government authority’s concern will convert the loan into equity,” Perera said.

Siriwardena meanwhile noted that refurbishment has started in the hotel financed by the operational profits to ready themselves to the new competition in the neighbourhood.

“Continental will be ready by beginning next year, Shangri-La and Movenpick will build soon,” Siriwardena said.

In 2011 three guest room floors with 120 rooms were refurbished at approximately Rs. 150 million while the Coffee Shop was refurbished at Rs. 10 million. A new ballroom ‘Bougainville’ was also added last year at an investment of Rs. 18 million. Currently two more floors with 80 rooms in total are being refurbished at Rs. 120 million.

Next in line is a soft cosmetic change in the panels of the Grand Ballroom, which was last refurbished in 2006. Rooms were last refurnished in 2004. “The owners are looking at a complete refurbishment of the entire hotel soon after the share issue,” Siriwardena said.

A rebranding and international management contract could be in the future for the hotel, hinted Siriwardena, even though nothing has been discussed on the subject with Galadari Brothers.

Galadari is also expecting to close the year with 50% occupancy. Thanks to the T20 demand, the September-October period will run on full occupancy of 80%. Their key markets of travellers in general are from the Middle East and India, he said.