The Government has been inundated by offers from top international chains to manage the Hilton Hotel in Colombo following the announcement last Wednesday that the property is now solely Sri Lankan owned.
A Finance Ministry source said that the hotel is seen as a good, exclusive property in post-war Sri Lanka where tourism is growing fast.
“Many top chains have expressed interest,” the source said.
Economic Development Minister Basil Rajapaksa announced in Parliament that the land had been taken over due to failure by Cornel Co., which leased the land from the Urban Development Authority (UDA) and sub-let it to Hotel Developers Lanka Ltd (HDL), to pay lease rental.
HDL which is the hotel’s owning company has been accumulating huge losses due to massive loan repayments with a current debt running to over Rs. 10 billion which it owes the Government.
About two weeks ago it paid off the last instalment of a Japanese loan but owes billions of rupees to the Government which has a 65 per cent stake in the company.The Finance Ministry source added that there are no immediate plans to discontinue with the Hilton management and use of the brand name as this chain has many more years in its management contract with HDL.
However HDL’s Board of Directors has been complaining about the high management fees.
Other tourism industry sources said that the Government is also likely to consider two options – voluntary liquidation of HDL and executing a take-over, like in the case of Lanka Marine Services (LMS) or the Waters Edge property, or selling off its 65 per cent stake to a prospective buyer which will then clear the Rs. 10 billion debt.
Meanwhile some analysts say that the ‘take-over’ announcement has triggered ‘anxiety’ in the industry sending a signal to foreign investors of a Government policy of acquiring private companies like in the case of LMS, Waters Edge and Sri Lanka Insurance Corporation.