John Keells Hotels to sell Cinnamon Citadel owner as part of a Rs. 2.78 billion transaction with Lavendish Leisure, marking a strategic shift in the group’s hospitality portfolio and reinforcing its asset-light strategy.
John Keells Hotels to sell Cinnamon Citadel owner in Rs. 2.78b hospitality deal
In a regulatory disclosure, John Keells Hotels PLC announced that it has entered into a binding agreement with Lavendish Leisure, the hospitality arm of the Dedigama Group, to divest its majority stake in Kandy Walk Inn Ltd. (KWIL), the owning company of the Cinnamon Citadel hotel in Kandy.
The agreement involves the sale of the company’s entire shareholding in KWIL, representing 98.39 percent of the issued share capital, for a total consideration of Rs. 2.777 billion. The transaction underscores a broader restructuring initiative within the hospitality sector as companies adjust their portfolios in response to evolving tourism trends and investment priorities.
KWIL owns the well-known Cinnamon Citadel Kandy, a long-established property located in Kandy. The hotel has been part of the group’s hospitality portfolio for years and is recognized as one of the city’s prominent riverside hotels, catering to both international tourists and domestic travelers.
Under the terms of the agreement, the hotel will continue to operate under the Cinnamon Hotels & Resorts brand for a minimum period of 12 months following the completion of the transaction. After this initial period, the management arrangement will be reviewed by the parties involved.
The move where John Keells Hotels to sell Cinnamon Citadel owner aligns with the group’s broader asset-light strategy for its hotel operations. This strategy focuses on reducing direct ownership of properties while maintaining brand presence and management expertise across key tourism destinations.
Industry analysts say the shift toward an asset-light model has become increasingly common among hospitality groups worldwide. By divesting certain property holdings while retaining operational or branding arrangements, companies can free up capital for reinvestment in newer developments, renovations, and strategic expansion.
For John Keells Holdings, one of Sri Lanka’s largest diversified conglomerates, the transaction represents part of a long-term repositioning of its hospitality business. The company has been actively reviewing its portfolio to ensure that assets align with its long-term strategic direction and market opportunities.
The divestment also follows the commencement of operations of Kandy Myst by Cinnamon, a newer hospitality project in Kandy whose operating entity is 40 percent owned by John Keells Hotels. The opening of this property reflects the company’s focus on modern hospitality concepts and targeted investment in properties that align with evolving traveler preferences.
According to the company, proceeds from the sale will be used to support the optimal allocation of capital across its hotel portfolio. This includes potential upgrades, refurbishments, and strategic investments aimed at strengthening the positioning of its existing properties and enhancing their long-term competitiveness.
The decision to divest the property’s owning entity comes at a time when Sri Lanka’s tourism sector is gradually regaining momentum after several challenging years. Tourism arrivals have been recovering steadily, prompting hospitality groups to reassess their strategies and prioritize investments that offer stronger long-term returns.
Market observers note that partnerships between established hospitality brands and local investors are becoming more common in Sri Lanka’s tourism industry. Such collaborations allow international or regional hotel brands to focus on operations and brand management while local partners take on ownership or investment roles.
In this context, the development where John Keells Hotels to sell Cinnamon Citadel owner reflects broader changes in how hotel groups structure their business models. Rather than maintaining ownership of every property, companies increasingly prefer to leverage management contracts, franchise agreements, or joint ventures to expand their footprint.
Lavendish Leisure’s acquisition of the property’s owning entity also signals continued investor interest in Sri Lanka’s hospitality assets, particularly in well-established tourist destinations such as Kandy. Known for its cultural heritage and natural surroundings, the city remains a key destination within the country’s tourism circuit.
The Cinnamon Citadel property itself occupies a strategic location along the Mahaweli River, offering scenic views and proximity to major cultural attractions in the region. Its established reputation and consistent visitor demand are likely to remain attractive factors for investors seeking long-term opportunities in Sri Lanka’s tourism industry.
The transaction is expected to be completed by March 31, subject to customary regulatory and administrative procedures. The company has indicated that a further announcement will be made once the deal is formally finalised.
Beyond the immediate financial implications, the sale reflects a broader trend of capital optimization within the hospitality sector. By reallocating resources toward newer developments and high-growth segments, companies aim to remain competitive in an increasingly dynamic global tourism landscape.
For investors and industry observers, the announcement where John Keells Hotels to sell Cinnamon Citadel owner serves as another example of how Sri Lanka’s leading corporate groups are adapting their strategies in response to shifting market dynamics and long-term growth opportunities.