Asia Leisure to build beach resort in Sri Lanka

Tokyo-based boutique-asset management company will invest some two million US dollars into the 30-room deluxe ‘TeoriaTaprobana Hotel’.

Teoria Investment Company Limited of Japan is investing two million US dollars in a beach resort to be built by Sri Lanka’s Asia Leisure, which is seeking partners for new hotels, officials said. The company is acquiring a 34 percent stake in a beach front property in Balapitiya, on Sri Lanka’s South-western coast.

Teoria’s Chief Executive Shigenori Shinagawa said he hoped the investment will act as a “bridge between Japan and Sri Lanka”. The hotel venture also marks Teoria’s first foray into the South Asian destination, which Shinagawa described as “very exciting”.

Sri Lanka’s Asia Leisure, a division of listed Asia Capital Plc, is scouting for private cash to develop small luxury hotels along the island’s coastline including Trincomalee in the northeast and Galle in the south.

“Internally, we are reaching the limit of raising capital to build new hotels,” Asia Capital’s director, Stefan Abeysinghe told reporters on Friday after the deal with Teoria.

“We need to raise seven-to-eight million dollars each (for each hotel), to start projects in Galle and Trincomalee.”

Sri Lanka’s interest rates have moved up over the past year as a sudden surge in bank credit taken by state energy enterprises to manipulate prices triggered a balance of payments crisis.

“Asia Capital will buy the properties, but we need working capital to build, for that we are talking to several foreign parties to invest in each property,” Abeysinghe said.

The 30-room Balapitiya boutique property is due to be ready for occupation by April 2013, for which the local partners hope, will attract Japanese holidaymakers.

Formerly known as ‘Taruvillas’, Asia Leisure owns and operates three small luxury properties: The Park Street Hotel, Colombo (13 rooms); The River House, Balapitiya (five rooms); and the Tamarind Hill, Galle (13 rooms).

Another 35-room property is being developed along the southern coast of Wadduwa.

The five properties will raise Asia Capital’s room portfolio to 100 by mid-2013. Abeysinghe said they were looking out to buy an existing brand and rename the hotel chain or add new developments under the existing brand name.

Teoria’s investments come as Sri Lanka’s traditional tourist markets in the West slow down in the face of economic hard times in home countries. The island is looking to new markets of China, the Gulf and Russia.

Sri Lanka has set it’s sights on attracting 2.5 million tourists by 2016, after experiencing a boom following the end of the near four decades-long ethnic conflict in May 2009.

Tourist arrivals hit a record 855,975 in 2011 and continue to grow after the government scrapped the visa-on-arrival system in January.

From January to March 2012, tourist arrivals have climbed 21.1 percent to 260,525 over the same period a year earlier, according to Sri Lanka Tourism figures

“I think now is the time to enter, with things taking on a slight dip,” said Abeysinghe. “Tourism is billed for a healthy growth in the coming years.”

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