Thursday, April 29, 2010

Sri Lanka - Hotel sector shares gaining strength

By Mario Andree

Hotel sector shares trading in the Colombo Stock Exchange (CSE) have improved to unbelievable heights in recent weeks.

The hotel sector continues to be a favourite given the high expected earnings, the CSE said.

The CSE said hotel shares had yet not reached their real value and it is hoped to gain further.

There are some hotel projects in the pipeline to be listed in the CSE.

Many companies that invested in Jaffna are looking for listings in the CSE in the future, CSE data showed.

In Sri Lanka, capital has been a constraint for the development of many projects. Earlier companies went for banks when in need of capital but today they turn towards equity funds, so many companies in the hospitality sector has turn towards trading shares, a broker said.

The keen interest in the hotel sector helped it gain higher than other shares. Many locals have invested in hotel shares, he said.

During the war period, the tourism industry was not catering to the local tourists but solely depending on foreigners.

At present, many hoteliers are catering to locals as well as foreigners. This has resulted in the rapid upward movement of shares in the stock market.

The past week has recorded the highest investment contribution to the hotel sector. CSE data shows.

The Board of Investment (BOI) said it has approved and signed agreements for eight new investments worth US$20 million that will create 500 job opportunities, a release showed.

Two mini-hydro power plants and new hotels and hotel refurbishment are among several investments approved by Sri Lanka’s investment promotion agency which would ensure the fulfillment of tourist needs which is expected to arise with the gaining of the sector.

The deal with Nilwala Vidulibala Company for a venture to establish a mini-hydro power plant at Morawaka, south east of the capital Colombo, with an investment of over US$3.28 million.

It also approved an investment of over US$5.5 million for another mini hydro-power plant, of 4,000 kilowatts capacity, at Kirkoswald Estate, Norwood, in the central hills.

The listed Aitken Spence Hotels, which operates a chain of hotels in Sri Lanka, the Maldives and India, signed an agreement with the BOI for an investment project to refurbish and upgrade Neptune Hotel at Beruwala, a beach resort on the south-west coast, with an investment of more than US$4 million.

Aitken Spence hotels have gained positive at the CSE. The last trading price stands at Rs. 450, according to the CSE report.

BOI also gave approval to the listed Stafford Hotel for a US$4.4 million investment to refurbish and upgrade Club Dolphin at Waikkal, on the north-west coast.

The BOI also said it approved an investment of US$500,000 to set up a 25-room hotel in north-central Vavuniya by Thampa Tourist Hotel and Inn.

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