Hilton Colombo sale remains on hold as policy uncertainty delays IMF-linked divestment despite stronger revenue and operational recovery.
Hilton Colombo sale plans remain stalled as uncertainty over the divestment of Hotel Developers (Lanka) Ltd begins affecting strategic decision-making.
The delayed sale of the state-owned company, which operates Hilton Colombo, is now creating uncertainty around the future ownership structure of the hotel.
The proposed divestiture had been viewed as a key element of Sri Lanka’s state enterprise reform agenda under the IMF-backed Extended Fund Facility programme. However, the process remains on hold.
According to the company’s annual report, the divestment has been paused pending new policy direction from the government.
The Secretary to the Treasury continues to hold a 100 percent stake in Hotel Developers (Lanka) Ltd, keeping the entity fully under state ownership for now.
Despite the ownership uncertainty, the company recorded a strong operational turnaround for the financial year ended 31 December 2024.
Total revenue increased by 24.1 percent to Rs. 5.39 billion, compared to Rs. 4.34 billion in 2023.
This growth was mainly driven by a 62.5 percent rise in room revenue, which reached Rs. 1.84 billion.
Food and beverage revenue also improved, increasing by 10.1 percent to Rs. 3.34 billion.
Operating profit before depreciation rose sharply by 433 percent to Rs. 872 million, compared to Rs. 163 million a year earlier.
A major factor behind the recovery was the near-completion of a renovation project that had continued for nearly a decade.
The project upgraded 264 guest rooms and restored the hotel’s operational room inventory to its full capacity of 368 rooms by November 2024.
The expanded capacity and improved operating efficiency helped reduce the company’s loss before tax to Rs. 268.3 million, compared to Rs. 784.3 million in the previous year.
The loss after tax also narrowed to Rs. 339.8 million, down from Rs. 688.7 million in 2023.
Occupancy levels improved significantly during the year.
Hilton Colombo recorded an occupancy rate of 51 percent in 2024, compared to 33 percent in the previous year.
This performance broadly matched the wider recovery in Colombo’s hospitality sector, where city hotels recorded an average occupancy rate of around 53 percent during the same period.
Management said renovation costs had been capitalised based on estimated costs to completion provided by the cost consultant, as final contractor invoices are still pending.
The company’s balance sheet reflects a stronger asset base, although short-term obligations have also increased.
Total assets rose by 4.2 percent to Rs. 21.42 billion.
This was driven mainly by a 24 percent increase in property, plant and equipment, which rose to Rs. 14.32 billion following the capitalisation of room renovation costs.
Capital work-in-progress fell sharply by 94.8 percent to Rs. 89 million.
Meanwhile, cash and bank balances declined by 62.4 percent to Rs. 104 million, mainly due to capital expenditure and debt servicing.
Total liabilities increased by 14.6 percent to Rs. 9.51 billion.
Non-current liabilities rose by 7.6 percent to Rs. 5.04 billion, reflecting the full drawdown of long-term interest-bearing borrowings, which reached Rs. 3.35 billion.
Current liabilities also climbed by 23.6 percent to Rs. 4.46 billion.
This was driven by loan maturities following the end of grace periods and higher trade and other payables linked to increased business activity.
Shareholders’ equity edged down by 2.9 percent to Rs. 11.91 billion, reflecting the company’s post-tax losses for the year.
However, questions remain over whether the government will proceed with the IMF-linked divestment, revise its policy direction, or keep the hotel under state ownership.
What happens next could be critical, as Hilton Colombo’s improving operations now stand against a wider policy delay that may shape the future of Sri Lanka’s state enterprise reform programme.
