COLOMBO, Sri Lanka – 31 August 2026 – Mahaweli Reach Hotels PLC (CSE: MRH) today released its Annual Report for the financial year ended 31st March 2026, offering shareholders and the market a comprehensive overview of its financial performance, operational environment, corporate governance, and strategic outlook.
Financial Performance Overview
The report highlights a challenging year for the iconic Kandy hotel. For the fiscal year 2025/26, Mahaweli Reach Hotels PLC recorded a revenue of LKR 774,056,560, a decrease from LKR 1,007,410,811 in the previous financial year (2024/25). The company reported an EBITDA of LKR (59,767,933) and a Loss Before Tax of LKR (378,031,768). The Loss After Tax stood at LKR (364,016,547), leading to an Earnings Per Share (EPS) of LKR (7.73), a decline from the prior year’s LKR (4.59).
The occupancy rate for the year was 40%. The report attributes the downturn in occupancy significantly to the company’s strategy of maintaining determined room rates and its reluctance to engage in competitive pricing practices prevalent in a price-sensitive market. Management continuously reviews these practices to achieve optimal outcomes in a demanding operating environment, while also considering the property’s age in strategic planning and ongoing improvements.
Operational Environment and Industry Challenges
The financial year was marked by a continued, albeit complex, recovery in Sri Lanka’s tourism sector. While macroeconomic stability improved and international visitor arrivals maintained strong growth, the operating landscape was influenced by heightened geopolitical tensions, adverse weather events, and persistent global economic uncertainty. The ongoing Middle East conflict, for instance, disrupted regional air routes and raised airfare costs, dampening travel sentiment.
Closer to home, Sri Lanka, and Mahaweli Reach Hotel itself, experienced severe weather, including impacts from Cyclone Ditwah, which caused flooding in low-lying garden areas adjacent to the Mahaweli River and disrupted transportation and tourism activities in the Kandy region. Despite these challenges, the company focused on service excellence, operational efficiency, guest satisfaction, prudent cost management, and sustainability initiatives.
Kandy, with its UNESCO World Heritage status and rich cultural heritage, remains a critical tourism hub. However, the report points to the “lack of an effective destination marketing campaign positioning Kandy” as an ongoing obstacle preventing the region from fully capitalizing on increased tourist arrivals to the country.
Corporate Governance and Board Adjustments
The Annual Report details several significant changes to the company’s Board of Directors and its sub-committees, reinforcing its commitment to strong governance. Mr. U. M. Maniku was appointed Chairman with effect from 24th June 2026. The Board also welcomed two new Independent Non-Executive Directors: Ms. S. M. A. Nonis Ranaweera (appointed 28th February 2026) and Ms. E. W. M. R. Samindhi Unamboowe (appointed 24th June 2026). They have also taken on chairmanships in key committees; Ms. Ranaweera now chairs the Remuneration Committee and Nomination & Governance Committee, while Ms. Unamboowe chairs the Audit Committee and Related Party Transaction Review Committee.
The report also notes the retirements of Mr. J. R. P. M. Paiva (w.e.f. 01st May 2025) and the resignations of Mr. C. N. S. Mendis (w.e.f. 28th February 2026) and Mr. N. Weerakoon (w.e.f. 31st March 2026). Furthermore, the Board proposed the re-election of Mr. Ahmed Maumoon and Mr. Mestiyage Don Mevan Gunathileke, who retire by rotation. Special resolutions are also put forth for the re-appointment of Mr. J. A. Panabokke and Mr. A. U. Maniku, both over seventy years of age, for a further period of one year, waiving the age limit stipulated by the Companies Act No. 07 of 2007.
Risk Management and Outlook
Mahaweli Reach Hotels PLC has identified several principal risks, including tourism demand risk, geopolitical risk, climate and environmental risk, economic risk, labour risk, cybersecurity risk, and regulatory and compliance risk. The report particularly highlights emerging sector-specific risks for Sri Lanka’s hospitality industry, such as:
- Middle East Geopolitical Conflict Risk: Disruptions to air travel and reduced demand.
- Revenue-Yield Erosion Risk: A disconnect between rising tourist arrivals and declining per-visitor spending.
- Hotel Room Oversupply & Margin Compression: Expanding accommodation supply outpacing demand.
- Regional Competitiveness Risk: Sri Lanka losing out to lower-cost regional destinations.
- Regulatory & Fiscal Policy Risk: Compliance obligations and cost implications from recent reforms.
Despite these headwinds, the Chairman’s review expresses cautious optimism. The company plans to leverage Sri Lanka’s strong tourism fundamentals, Kandy’s unique appeal, and Mahaweli Reach’s established brand, strategic location, and experienced workforce. Management remains committed to enhancing guest experiences, operational excellence, financial discipline, and sustainability to strengthen its market leadership and ensure long-term value for shareholders.
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