REPORT FROM SRI LANKA—The government’s Board of Investment is offering concessions to foreigners and locals for investment in renovations or new builds. A mid-scale project, one with an investment of 50 million rupees ($400,000), entitles the investor to a one-year tax holiday and to import raw materials duty-free, said Dilip Samarasinghe, the BOI’s director of media and public relations. A very large-scale project with an investment of more than 300 million rupees ($2.4 million) would merit a tax holiday of six to 12 years, he added.
The country’s development landscape is dominated by Sri Lankan players. The two largest in terms of room numbers, Aitken Spence Hotels and John Keells Hotels Group, are divisions of large, diversified conglomerates of the same names. Both have engaged in major renovations and refurbishments during the past two years.
Jetwing, a Colombo-based hotel and tour company with 12 properties in its portfolio, is looking to make a splash with an $18-million investment to build six hotels in the country by 2014, according to Jetwing Chairman Hiran Cooray.
Also, the diversified Sri Lankan business group, Hayleys, which owns or manages 350 rooms, has plans to add 400 more rooms via ground-up construction and expansion. Two other local diversified business groups, Finco Group and Softlogic Holdings PLC, are new entrants in the hotel industry.
Finco launched its UGA Resorts in 2010 with the Ulagalla Resort in the ancient cities district. Softlogic last year bought the Ceysands Hotel on Bentota Beach for $7.2 million and will build a 220-room business hotel with Swiss-based Mövenpick Hotels & Resorts in Colombo.
Foreign companies and individuals can own property outright in Sri Lanka. Singapore’s Aman Resorts already owns and operates two hotels. Newcomer Shangri-La Hotels and Resorts bought the land for the “6-star,” 500-room hotel it is building in Colombo.
On the other hand, Taj Hotels Resorts & Palaces and Hilton Worldwide operate a total of five hotels but don’t own any. Many investors view 99-year leases a better choice because of fewer duties, the BOI’s Samarsinghe said.
From what little information can be gleaned, foreign newcomers so far are opting to partner Sri Lankan developers and investors.
Besides the Mövenpick-Softlogic joint venture, Thailand’s Minor Hotel Group Limited has partnered with local Serendib Leisure to renovate and manage two of Serendib’s hotels on the Bentota-Kalutara strip. Bangkok-based Six Senses Spas, which already operated spas in two of Aitken Spence’s Heritance hotels, is now building a spa and additions on a third Heritance property on Bentota Beach. The properties will be operated by Pegasus Capital Advisors LP, which on Tuesday announced it had entered into a binding agreement to acquire all of the Six Senses branded resort and spa management contracts and related intellectual property rights and operate them under a new company managed by Pegasus and its affiliates.
