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19 April, 2011 09:07 AM Source: Lanka Business Report - LBR
Browns.jpg

Browns Beach to be demolished, brand new 200 room five star hotel to be built at a cost of 3.5 bn rupees.

Sri Lanka’s Aitken Spence Hotels, the second largest hotel firm in the island will demolish Browns Beach Hotels, one of the island's oldest beach resorts to make way for a new hotel at a cost of 3.5 billion rupees, said a top company official.

“The existing hotel is about 30 years old, so we want to go for a brand new five star structure of 200 rooms,” said Thilak Gunawardana, the assistant vice president, finance at Aitken Spence Hotels, a subsidiary of Aitken Spence Group.

“It will be an up market unique hotel using the nice locality. The design has been finalized.”

The firm which owns and manages a chain of hotels in Sri Lanka, the Maldives Islands, India and Oman upped its stake in Browns Beach Hotels last month with the purchase of 10,000 shares at 21 rupees each.

Prior to the share purchase Spence held a stake of 28.7 percent or 2.75 million shares in Browns Beach, a 140 room listed three star hotel on a 6.5 acre beach front estate in Negombo. The share purchase upped Spence’s stake to 33.2 percent or 14.34 million shares.

Business tycoon Harry Jayawardena controlled Stassen Group holds nearly fifty percent stake in the hotel. Spence together with Stassen now control over 80 percent of Browns Beach.

The hotel raised 2.2 billion rupees in a rights issue last month. The balance 1.3 billion rupees is to be covered with debt.

Gunewardana said a Voluntary Retirement Scheme (VRS) was offered to the staff at Browns Beach last month which was accepted by almost all the non executive staff.

 

“We paid about 37 million to 180 plus people. Skills and requirements will change according to the new property.”

 

He said the new hotel will be constructed as a fully owned subsidiary of Browns Beach PLC and will be operational by 2013.

“It is too early to decide on branding or a name change. But we will be managing the hotel since we are a hotel management company,” he said.

He said the new hotel is targeting room rates of USD 150 to 200 per room night and an 60 to 70 percent occupancy rate throughout the year.

“We are quite very optimistic about the project being strategically placed close to the airport and beach. We hope to break even by the second year in to operation.”

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