Sharp dip in occupancy at both hotels Pegasus chairman concerned about "low grade, informal accommodation’’

Despite tourist arrivals hitting record highs last year and spending per visitor also recording an unprecedented 30.3% year-on-year, the hotel industry is grappling with what the chairman of an owning company called "low grade, informal accommodation venues."

Mr.D.C.R. Gunawardena, Chairman of Pegasus Hotels of Ceylon PLC, has said in the company’s annual report that this had "blurred the prospects for the hotel segment to the extent of occupancy in graded establishments is not reflective of the booming arrivals.’’

Gunawardena said that the year ended March 31, 2014 had seen Pegasus Hotel’s overall occupancy down to 44% from the previous year’s 53% with Giritale Hotel too running occupancy of 59% against 68% a year earlier.

Revenue at Pegasus was also down 8.31% to Rs.452.2 million and the group’s profit after-tax had slumped to Rs.67 million from the previous year’s Rs.142 million. This was the lowest net profit since 2011 when a profit of Rs.49 million was posted.

Nevertheless, the owning company continued to promote the hotel despite sluggish room occupancy. They had seen increased demand by local clients for special events such as weddings and conferences and other banquet functions.

"As such, during the year, the company undertook to refurbish its banquet hall with additional capacity. We are pleased to announce that the investment has paid off, with positive returns being generated during the year," he said.

Revenue from the MICE had also been contributed positively towards group earnings, the chairman said.

Pegasus Hotels which is a member of the Carson’s group is now over 40 years old and the group also owns Giritale Hotel near Polonnaruwa.

Sold as a city resort with its garden space and wide beach front, Pegasus is conveniently located between Katunayaka Airport and Colombo city while Giritale is uniquely located overlooking the Giritale tank, is popular among eco-tourists and also convenient for the Minneriya wild life sanctuary and for elephant viewing.

The report also commented on what it called "various competitions" for competent hotel staff both locally and from foreign employers. Despite losing trained personnel, the hotel focuses on staff training of school leavers as a key activity to meet its requirements.

The hotel owning company has a stated capital of Rs.515.2 million, capital reserves of Rs.675.1 million and revenue reserves of Rs.202.6 million in its books. Total assets ran at Rs.5.53 billion as at March 31, 2014 and total liabilities at Rs.138.1 million.

Carson Cumberbatch with 93.09% is the dominant shareholder with no other shareholder individually owning one percent.

The company has not year received compensation for approximately 1,605 perches of land acquired in 2008/09 for a fisheries harbor project. The value of the land at the date of acquisition has been placed at Rs.187.8 million.

There are ongoing court actions on this matter and Pegasus has expressed the view that it will take eight to ten years to bring it to a conclusion.

The directors have recommended a dividend of 50 cents per share for the year under review, the same as the previous year. Net assets per share were up to Rs.45.83 from Rs.44.18 the previous and the share closed for the year at Rs.37 against Rs.36.90 a year earlier.

The directors of the company are: Messrs. D.C.R. Gunawardena (Chairman), Mano Selvanathan, Hari Selvanathan, Sega Nagendra and P.M. Withana.
www.island.lk