From left: Ocean Edge General Manager Tilome Nanayakkara, City Construction Contractors Ltd Director Priyank Gupta and City Construction Contractors Ltd Director Thana B. Sritharan
Ocean Edge Colombo, the first suites concept upscale business hotel in Sri Lanka, boasts of luxury, convenience and privacy for long-stay travellers, befitting the country’s cosmopolitan capital city. It has been built with an investment of Rs. 2.5 billion. The Daily FT recently met up with City Construction Contractors Ltd. Director Priyank Gupta during his recent visit to Colombo, where he shared insights on this suites hotel concept, flow of travellers to Sri Lanka, demand for the destination, room for improvement and other key areas. Following are the excerpts of the interview.
By Charumini de Silva
Q: What made you select Sri Lanka for this investment?
A: We were looking for opportunities overseas in 2010 and we were looking at several countries. In 2011 we first came to Sri Lanka because there was a lot of buzz happening soon after the war. We felt that there is an opportunity which might take a little longer than what everybody would have thought. We were not looking at short-term projects and but for long-term business. Hospitality was one of the areas we wanted to invest in and we wanted to do a business hotel.
At that time Marine Drive was not developed as today, but with our expertise we were able to foresee that this location would be a hotspot in city of Colombo. I still believe that this would be the most sought after location in Colombo in future as well.
Q: Could you brief about Ocean Edge?
A: The property was originally built for an apartment project and it was almost done in terms of structure and building, but needed some changes to operate as a business hotel. This is a Rs. 2.5 billion investment. We looked at several options such as a normal hotel, and we could have easily done 220 rooms in this property, but we wanted to be different to what others were. Therefore, we created this to a suite hotel for long-stay, business travellers.
We have four types of suites – Panorama, Superior, Delux and Studio which amount to a total of 78, comprising a living area, a bedroom, a kitchen and a balcony overlooking the Indian Ocean. If you compare it to a normal five-star hotel, we are vertically and horizontally bigger than those rooms, giving more space to the customer with a homely feeling.
The furniture features large storage space because we are essentially looking at business travellers staying over a month. We don’t have any banqueting facilities; it helps the hotels to make money, but for business travellers it is always a disturbance. Hotels worldwide charge travellers for sea view rooms, but 90% of our suites comes with it at the same price.
Q: Are there any special packages?
A: Yes, certainly. We have special packages for long-staying business travellers, which ordinary hotels are not offering. Although we are a suite hotel, we will still be in the range of a five-star hotel room rate, which is a good value for money for business travellers looking at privacy with home-away-from-home luxury.
Q: What’s the occupancy rate you are looking at by the end of the year?
A: Well, we are looking at an average of 70% to 75% by the end of this year. We already have many repeat customers and we are confident of reaching these target.
Q: What is the return on investment you are looking at?
A: We are looking at around 16%.
Q: What further improvements are required to put Sri Lanka out there as a tourism destination?
A: I think Sri Lanka is heading in the right direction, with a slower pace. Probably the pace can be a bit faster, but being an investor you can always say that I’m a little impatient. The Government’s intention is in the right direction. If we can create Colombo as more of a destination, rather than a transit city, it would benefit more.
In the north of India, there is a small town which does three million tourists and the population of the town is only 7,000. It only caters to tourists from Delhi. Sri Lanka has a tourist arrival of 1.6 million and we are trying to do two million. If Sri Lankan can target one of the cities, the growth rate here would be more than 100%; but to do that we need infrastructure and resources, which possibly is coming with the help of private sector as well as the Government.
With the new hotels coming up in Colombo, I think we would become a destination for a lot of foreign travellers. Many people have asked me what would happen once international hotel chains such as Shangri-La and ITC come in. Would there be a surplus? I think it is the other way round; that is when we will see the actual tourism here in Sri Lanka.
The only concern is whether the supportive infrastructure at that point of time would be available in terms of number of flights to Colombo, manpower availability and so on. If the Government and the Tourist Board could provide those facilities, it is a huge possibility that we can make Sri Lanka a tourism hotspot and I think the future will be bright.
Q: Could you elaborate on the trends you see in business travellers and the mix of travellers you’re looking at in future?
A: It’s quite strange. This is a business hotels and we do have business guests, but in the meantime a lot of tourists come and stay with us. This shows that there is a big demand-supply mismatch in the tourist market as well. Traditionally, a tourist will only like to be in a hotel room, while suites are meant for business guests. The response for business travellers is tremendous but we are happy to see other tourists also coming and staying with us.
Q: What can you say about the talent and the skills of the staff?
A: We have around 80 staff at present at Ocean Edge. What I felt as a traveller is that they are of global standard. They are well trained and forthcoming. I’m fortunate to have such a good staff; I can run this operation smoothly because of the ability of my team.
Q: As a foreign investor, what were your expectations?
A: Coming from India, we have huge projects handled by big contractors, but the Sri Lankan contractors surprised me. They were in fact much ahead of Indians in terms of skills and professionalism. Hence, I owe a lot to them and again it is the same with the bankers, without whose cooperation we probably wouldn’t have successfully completed this project. They were very flexible and forthcoming.
Q: Are there any other investment plans in Sri Lanka?
A: We have a lot of opportunities. A lot of people have come to us for our expertise to finish their projects and have invited for joint ventures in the hospitality industry within Colombo. We are looking at opportunities as any business house does and one of them is the power sector.
We looked at power generation three years ago but we were not as motivated as we are now, after the blackout experience recently, because we always thought Sri Lanka was a surplus country. The only challenge in the power sector is that the projects are small and don’t give that critical mass for any foreign investor to come in and invest. We are open for opportunities and will look at them as and when they come.
Pix by Daminda Harsha Perera