Financial Times

Spence proceeds with $20m luxury hotel
Aitken Spence has decided to go ahead with its planned luxury resort and spa in Ahungalla, a joint venture with the up-market Six Senses group, now expected to cost almost $20 million, and is also expanding its Meeduparu island water bungalow resort in the Maldives.

“We’re definitely going ahead with the project with Six Senses,” declared Aitken Spence managing director Rajan Brito. “The only restricting factor had been the buffer zone. We’ve already obtained approval from the Coast Conservation Department and are going ahead with the project with a Thai architect.”

The government recently announced the coastal buffer zones imposed in the wake of the destruction caused by the tsunami would be relaxed and made more flexible mainly because of the scarcity of alternative land for displaced people. Aitken Spence had earlier frozen planning on its joint venture project with the Six Senses group to build a boutique hotel on a nine-acre plot of land next to Triton, owing to uncertainty caused by the buffer zone.

The cost of the planned project had originally been estimated at $15 million but Brito said estimates had been revised as costs, especially of building materials, had gone up. The company had applied for permission for the project before the December 26 tsunamis devastated the coastline and wrecked many resorts, prompting the government to introduce stricter rules restricting construction near the beach.

The government had earlier said it would strictly enforce the rule preventing construction within 100 metres of the high water mark on the beach. Aitken Spence has tied up with Six Senses, a resort and spa management and development company based in Thailand, to build the resort with 40 luxury villas.

Six Senses has a resort known as Soneva Gili, a ten-minute boat ride from the Maldivian capital Male, in which the cheapest villa suite goes for US$740-1,430 on a room only basis during the peak season.

The group was also spending a lot of money to refurbish its Triton and Kandalama hotels with the former, damaged by the tsunami, being given a complete makeover.

“Triton and Kandalama are being refurbished and Triton will become one of the best five star beach resorts in Sri Lanka with our refurbishment which is costing $12 million,” said Brito. “It’s going to be like a new hotel.”

Aitken Spence is spending $6 million on the Kandalama refurbishment. Both hotels are expected to be back in operation from December 2005.
Brito also said Aitken Spence was expanding and upgrading its up-market resort on Meeduparu island in the Maldives. The project is expected to cost $ 5million.

“We built 20 extra luxurious water bungalows called ‘Water Villas’ – it is a hotel within a hotel concept and will be a separate five-star resort.” The group’s three Maldives resorts contributed about 70 percent of Aitken Spence Hotel Holdings FY04 profit before tax but stock brokers have said they believe the delayed recovery of tourist arrivals to the archipelago will have a negative impact on group earnings.

Brito said the Maldives resorts, which experienced a sharp drop in occupancy in the last eight months, had recovered. “Our Maldivian resorts have fully recovered. We now have up to 85 percent occupancy and this winter season should be alright.”

The Aitken Spence group is still interested in expanding in the Maldive islands although it did not proceed with a bid for one of 11 islands offered for development in the archipelago.

“We will be looking for new islands and we have scope for expanding in our existing island resorts like Meeduparu,” Brito said. Brito also said Aitken Spence was having talks with Indian firms on a resort project in Kerala as the investment climate was becoming better with the launch of additional flights to India by the national carrier SriLankan Airlines and more flights to Colombo by domestic Indian airlines.

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