Although Hotel Services (Ceylon) Ltd., the owners of the Hotel Ceylon Intercontinental, has reported another loss during the year ended March 31, 1998, the chairman of the owning company is optimistic that the hotel would be operated profitably during the current financial year.

"With the progressive improvements in the tourist arrivals, and based on current performance, it is expected that your hotel would be operated profitably throughout the current year. All indications are that provided conditions in and around the Colombo remain as they are, there would be a return to greater profitability,'' the chairman, Azmi Wan Hamza, has reported to shareholders.

According to the profit and loss account, the company lost Rs. 5.5 million rupee during the year under review, a slight improvement from the previous year's loss of Rs. 5.7 million. Accumulated losses carried forward now total Rs. 43 million.

Hotel Services is a subsidiary of Asian Hotels Corporation Ltd., owners of the Hotel Lanka Oberoi, which also owns a substantial stake in Trans Asia Hotels Ltd., owners of the Trans Asia Hotel. With these interests, Asian Hotels controls the majority of the 5-star hotel rooms in Colombo.

Hamza said that the hotel, previously affected by the Central Bank bomb, had once again suffered a major setback after the explosion in the Galadari Hotel car park in October last year. Approximately 80% of the cost of damage due to the second bomb had been met from insurance cover enabling immediate restoration of the property.

"However, the entire hotel had not been restored to its original status due to the further need for capital,'' the chairman said.

Occupancy had dropped sharply due to a decline in tourist arrivals immediately after the bomb explosion. But these levels had since gradually improved and the net operating losses of the previous years have been cleared and the hotel is now able to pay the lease rental due to the owning company in accordance with the lease agreement, Hamzah said.

Under this agreements, the Intercontinental Corporation who are the franchise operators have to pay the owning company a lease rent for the property in accordance with profitability. Rs. 4.1 million had been paid on this account during the year under review. There was no payment in the previous year.

The owning company is required to pay the Ceylon Tourist Board ground rent for the land on which the hotel stands. Rs. 5 million, amounting to two years lease rent for 1996 and 1997, has been deferred by the Tourist Board with no interest payable. But this sum became payable in five equal payments from Feb. 1, 1998.

The directors have reported that the 1998 lease rental amounting to Rs. 2.5 million has been deferred for five years commencing Feb. 1, 1999.

The directors of the company are Messrs. Azmi Wan Hamzah (chairman), M.J.C. Amarasuriya, Ranjith Dahanayake, Sanjeev Gardiner, Daniel Roche, Mrs. R.N. Hewavitarne, Daniel Desbaillets, Chanaka de Silva (alternate to Daniel Desbaillets), George Ondaatjie and Manohan Nanayakkara.