Revenue of hotels, mall, offices, and apartments, exceeded US$51m for 2023 – US$33.2m from hotels, and US$18.5m from investment properties such as One Galle Face (OGF) apartments (space ranging from 1,733 square foot to 2,745 sq ft, and flats exceeding 5,500sq ft, plus penthouses), and ‘Grade A’ offices at OGF Tower.

OGF offices have even attracted Sri Lanka Government tenants.

The national auditor once noted the Ministry of Technology renting a Rs 1.87m a month, 7,512 sq ft (bigger than two tennis courts), 11th floor office at One Galle Face from September 22, 2021. The ministry explained, it is “very close’’ the President’s Office. In 2022, the auditor found the ministry splashed out Rs. 4.2m to lease OGF space.

Income tax expense of hotels in Sri Lanka was US$1m in 2023, compared with US$800,000 in the year before. Investment property income tax expense was US$700,000 versus US$3.3m in 2022.

In Hong Kong, Shangri-La’s hotels, the Kowloon Shangri-La and Island Shangri-La are reputed for some of the sought-after restaurants, including the Michelin star Shang Palace and the Michelin star Restaurant Petrus.

Shangri-La Asia has a 90% stake in the two Sri Lanka hotels.

Shangri-La in Colombo, draws the political class, public sector, the wealthy and upwardly mobile.

Consolidated revenue of hotels in Sri Lanka increased by 63.5% to US$33.2m, from US$20.3m in 2022.

Losses at investment properties such as apartments, retail space, offices, and mall in Sri Lanka, also narrowed to US$1m from US$2.3m in the year before. But, consolidated revenue surged by 51.6% to US$18.5m from US$12.2m the year before. Shangri-La Asia called it a “significant revenue improvement’’. The level of rent and occupancy improved significantly. There were no details.

Investment properties are valued by Sunil Fernando & Associates (Pvt) Ltd.

Occupancy was 36% and average room rate was US$146 (versus US$132 in 2022). Average revenue per room was US$52 vs US$29 in 2022. Occupancy in 2022, was 22%.

Operating profit of Sri Lanka investment properties was US$9.8m versus US$6m the year before, while for hotels it was US$7.6m (US$2.5m in 2022), a significant improvement.

Assets of Sri Lanka hotels were stated as US$109.6m versus US$100.5m in 2022, while investment properties were recorded at US$203.4m versus US$171.1m in 2022. Property development for sale was stated as US$18.3m (US$16.6m in 2022).

Shangri-La Asia reported an exceptional foreign exchange gai

n of US$29.9m from the rupee appreciation versus an exceptional forex loss of US$110.3m in 2022 because the rupee tumbled.

Kuok Khoon Ean, a son of magnate Robert Kuok Hock Nien, headed Shangri-La Asia at the time of the Colombo hotel groundbreaking.

Shangri-La Asia was granted multi-year tax benefits during the Mahinda Rajapaksa credit card economy years, when the Central Bank of Sri Lanka, the Treasury, and Finance Ministry gorged on US dollar debt.

Under the so-called ‘strategic development project’ umbrella, the hotel group a part of Kuok Hock Nien’s Kerry Group (which includes the sugar, oils, and grains business Wilmar International, and Kerry Properties), was handed corporate income tax subsidy for 10 years, followed by 6% for 15 years, as revealed in data by Sri Lanka Treasury to comply with IMF lending conditions.

There is no tax on dividends for 10 years plus one year thereafter. Pay as you earn tax exemption was allowed for 20 expatriates for five years.

Subsidiary Shangri-La Investments Lanka (Pvt) Ltd., also got corporate income tax subsidy for 10 years, followed by 6% for 15 years. There is no tax on dividends for 10 years plus another year. Twenty expat staff are free from PAYE tax for five years.

The agreement (no 228 in 2011) was signed by Jayampathi Bandaranayake, director general, Board of Investment of Sri Lanka, Madhu Rama Chandra Rao, director, Shangri-La Hotel Lanka (Private) Ltd, and Mohamed Fazal Mohamed Rifdhy, director, Shangri-La Hotel Lanka. Agreement No 24 in 2015, was signed by then BOI chair Upul Jayasuriya, Wilfred Chen, director, Shangri-La Hotel Lanka, and Mohomad Sajjad Mawzoon, director, Shangri-La Hotel Lanka, as shown in Parliament records citing Malik Samarawickrama, then minister of development strategies and international trade.

The prime, ocean-front land of 4.0469 hectares (10 acres) in Colombo, was a state grant.

Shangri-La is not the only company granted generous subsidies and concessions in Sri Lanka.

Shangri-La Asia, chaired by Kuok Hui Kwong, 45, built office, commercial space, and hundreds of apartments in Sri Lanka for generating rental yields, or for capital appreciation, or both.

Among them is 90% owned One Galle Face. In 2022, the company reported 390 apartments (372 for sale; 18 for rent) in the mall, and handed over 19 to buyers. At December 31, 2022, 300 apartments (81% of total) have been sold, of which 295 (98% of sold) have been handed over to buyers.

Shangri-La Asia reported a consolidated profit of US$184.1m for the year ended December 31, 2023 from a US$158.5m loss in 2022.

By Kapila Bandara