Citrus posts steady performance in challenging times; bullish about future

Citrus Leisure Group has posted 102% growth in revenue for 2014/15, recording Rs 616 million of which its first property in Hikkaduwa contributed Rs 270 million. The newly opened Citrus Waskaduwa hotel contributed Rs 317 million in revenue, operating only for 9 months of the financial year.

The strong revenues were posted despite the entire industry experiencing a sharp drop in both Summer and Winter arrivals from two of its key source markets – Ukraine and Russia – which were impacted by the Crimean crisis. As a result, Citrus Hikkaduwa, the Group’s first project, was unable to capitalise on an otherwise good year but maintained its profit momentum by recording an operational profit of Rs 66 million.

The Company was very excited about the commencement of its iconic 150-roomed 5-star flagship resort Citrus Waskaduwa, which opened its doors in July 2014. The company has aggressively marketed the destination Waskaduwa by promoting activities in and around the area, including adventure tourism options such as off road cycling. The property has also attracted attention from the MICE market and has hosted several local and international events including the glamorous Miss Sri Lanka for Miss Earth finale.

The company commenting on the performance said, “It is a source of immense satisfaction that our property in Waskaduwa has so quickly made a mark on the tourism industry. The resort was recently recognized by TripAdvisor with a Certificate of Excellence, the first time a 5star property in Sri Lanka has received the recognition in its very first year of operation.”

Citrus Waskaduwa reported an operational loss of Rs 195 million during its first year of operations in keeping with expectations, due to pre-opening expenses and due to being at fully operational capacity for around 6 months of the year. The property was therefore unable to contract with most tour operators for the Winter season in 2014. The management is very excited about strong results in 2015/16 with major tour operators extremely happy with the product; a good mix of contracts from traditional and emerging markets is currently in place to generate greater footfall for Citrus Waskaduwa.

As a result, the Citrus Leisure Group recorded an operational loss of Rs 151 million for the year ended 31 March 2015. The new financial year is set to be an exciting one for Citrus Leisure PLC, with Citrus Waskaduwa operating at full throttle and alternative marketing strategies at Citrus Hikkaduwa attracting new markets. Soon, the Group will also make its entry into the City Hotel segment, through its fully owned subsidiary Citrus Silver Limited. Commencing 01 June 2015, Citrus Silver will enter into a 10 year lease agreement with George Steuart & Co., to operate the 50-roomed boutique business hotel at the heart of Colombo’s commercial district. The property will operate under the brand name ‘The Steuart by Citrus’. Having a city presence, will enable the Group to cross-promote its resort properties more effectively.

The Company is also encouraged by several positive announcements made by the current administration with regard to the proposed tourism development zone in Kalpitiya. The zone had not got underway for several years, resulting in investors withholding their developments due to anticipated infrastructure development not taking place as per the government’s strategic plan. A fresh focus on Kalpitiya, as indicated by the Sri Lanka Tourism Development Authority in the recent past, augurs well for Citrus, which despite obtaining the necessary approvals and permits has so far delayed commencing construction there. Meanwhile the Company continues to hold a strategic investment in a 20% stake of Colombo Land and Development PLC, which is an associate company. The Group’s substantial asset base also includes a strategically located property in Passikudah, available for future development.

Chandana Talwatte, CEO of Citrus Leisure PLC added, “The Citrus ethos of creating ‘Happiness Moments’ has become firmly entrenched in its service philosophy and this, combined with our unique properties and excellent F&B offering, bodes well for continued guest satisfaction. Furthermore, given the current developments in our locations of operation and the marketing and service strategies that we have in place at our properties, we are bullish about our prospects for the coming year. As a young leisure company that believes in Sri Lanka’s tourism offering, the Company is determined to make a meaningful contribution towards the betterment of the industry”.