PIONEERS IN INNOVATION

17 Aug

Aitken Spence plc is a conglomerate of businesses with a long and distinguished history originating in the trading and insurance industries in Sri Lanka, but now involved in hospitality, tourism and the services industries. Mr Rajan Brito,Managing Director, tells Bob Combes about the group’s impressive level of growth and diversity and its pioneering approach to business.

The company was established in 1868 by two Scotsmen, who came out to Sri Lanka when it was a British colony, and when several British companies were set up around the colonial tea plantation industry. Aitken Spence plc, listed in the Colombo Stock Exchange since 1983, was originally named Clark Spence & Company and commenced business activities 141 years ago in Galle. Mr Brito recounts, “Way back in 1876 we were appointed as agents for Lloyds of London, and we became agents for a number of international shipping agencies shortly afterwards. “The company became an agency for the management of tea and rubber plantations that the British set up in the early 1920s.” Since then, Aitken Spence has enjoyed amazing growth and success, and now employs 5,000 staff in its offices and factories, 2,000 of whom work in hotels, and an additional 10,000 of whom work at its tea plantations. With interests in South Asia, the Middle East and Africa, the company was recognized by Forbes as one of the best companies in Asia, with revenues of just under a billion dollars for three consecutive years.

A wide portfolio

Mr Brito continues, “Our activities and products are divided into four areas: travel and tourism, logistics, services, and strategic investments. Our services include acting as an agent for Western Union money transfer, and as the agent in Sri Lanka for OTIS Elevators. We are also an insurance broker, and we are involved in property management. The strategic investment area includes power generation, printing and packaging, garment manufacturing; and tea and rubber plantations. “Aitken Spence is the leading resort operator in Sri Lanka and the largest international hotel chain in the Maldives. We manage 10 hotels in Sri Lanka, four of these being on the west coast, one on the south coast and the others centrally located. We manage seven hotels in the Maldives, and also five hotels in India and five in Oman, with minority stakes in some of them. Through our management capabilities, nurtured for over three decades, many of the properties in our chain of 27 hotels and resorts have, over the years, won many international accolades, especially for service excellence, environmental management and culinary expertise. Among the accolades we have won, is being listed by the Sunday Times of the UK as one of the best places to stay in the world. We were the first LEED certified hotel in the world, and we have won the UNESCO Asia Pacific Heritage Merit Award, and the RICS Award 2000, conferred by the Royal Institute of Chartered Surveyors, London. We were also the first company to have a Green Globe – certified hotel in Asia. “We are able to add great value to our partners by marketing their hotels through our association with over 200 global tour operators. We have represented TUI since the1970s (known as Thomsons in the UK), the world’s largest integrated tourism company and, since 2003, TUI has become a 50:50 joint venture company with us for inbound and outbound travel in Sri Lanka. “In addition, we act as airline GSA (General Sales Agent) for Singapore Airlines, Kingfisher Airlines and Aeroflot and we also hold agencies for numerous airlines for cargo. As well as being agents for Rail Europe and Tradewinds, we have a representative office for CarlsonWagon Lit.” Aitken Spence also has an extensive fleet of vehicles, organises conventions and exhibitions and has been an IATA (International Association of Travel Agents) approved outbound travel agency since 1952.”

Integrated logistics

Mr Brito explains, “Our integrated logistics and freight-forwarding activities include a storage facility for laden and empty cargo containers, as well as container repairs and conversions. We also undertake local and multi-country cargo consolidation and stuffing at our container freight station. We have our own road transport company, and we contract out to shipping lines as well. We also manage warehouses belonging to us and to other companies, and we have flexi-tanks and refrigerated storage facilities. In addition, we have a garments-on hanger and quality assurance (QA) centre, where we undertake QA activities for garment manufacturers. We are also involved in transportation, and have a fleet of prime movers, trailers and bowsers (fuel and oil tankers). “We are, additionally, involved in heavy and bulk cargo handling. We have represented TNT for over a quarter of a century, and we act as a domestic courier through our subsidiary, Ace Xpress, with 14 courier centres island-wide, and act as agents for Spring Global Mail. Moreover we are also involved in freight-forwarding mainly for the garments trade and also in maritime transport, being agents for Hapag Lloyd and Hyundai.

Maritime activities

“Our maritime activities include port management and development. We have established a partnership with China Merchant Group, and have just submitted a bid for a 35 year contract to design, build and operate a new terminal in the Port of Colombo, worth US$500 million. We are confident that we shall get the contract as we are the sole bidder. We also have an efficiency management contract for the port in Durban, South Africa, which involves us sending our staff there to increase the port’s efficiency, particularly with respect to raising the number of moves per hour.”

Strategic investments

“We have three power-generating plants in Sri Lanka producing 140MWof electricity from thermal power fuelled by oil and diesel, contributing 12 percent of the island’s power. We are working with Caterpillar of the USA and Wärtsila of Finland on our power plants. We have had a printing and packaging plant since 1950, equipped with Heidelberg offset printing machines, and we manufacture garments for Marks & Spencer, Columbia (USA) and Gap in two factories. “For the past 100 years, except for a gap between 1975 and 1995, when the Government nationalised plantations, we have been associated with the plantations industry and are now a partner in a consortium of 33 plantation estates covering 16,000 hectares. ” We also have a joint venture crude palm oil mill – only the second such facility to have been established in Sri Lanka in 30 years.”

Being a pioneer

Mr Brito believes that strength in management and a willingness to explore new opportunities are among several key strengths accounting for the company’s success. “For example, we pioneered the first five-star resort, the first theme resort and the first eco resort in Sri Lanka. Our flagship resort, Heritance Kandalama has become a paradigm for global best practice in terms of sustainable tourism with many pioneering initiatives, which have been replicated in many of our other hotels.”

Reliable and trustworthy

“Lastly, the broad range of our activities means that we are better able to resist the downturn, and we have not been too affected by the recession. The exception has been our operations in the Maldives because these are more reliant on western guests, which, again, we are attempting to change through market diversification strategies focused especially on East Asia. Last year, we were one of the few listed companies in Sri Lanka showing an increase in profit (over 10 percent).We have returned an average revenue growth of 31.5 percent and a profit growth of 16.2 percent over the last four years. “We have ISO-accreditation for all of our activities, and we are partners in the UN Global Compact (a strategic policy initiative for businesses that are committed to aligning their operations and strategies with ten universally accepted principles in the areas of human rights, labour, environment and anticorruption), being members of the steering committee of the local network. The principles of the compact are applied in all of our hotels.

A good time for growth

“Fortunately, the 30 year civil war has just come to an end, and we are seeing a gradual return to tourism particularly as the island has an array of attractions, including very rich biodiversity and cultural heritage. Sri Lanka has the beach, wildlife, rain forests, cricket and now peace, all on a beautiful island. Also, the Tamil diaspora are returning and investing again in the country.

A bright future

As for the future, Aitken Spence is not content to rest on its laurels: “We shall be looking at new opportunities, especially in hotel management, renewable energy, notably wind power, infrastructure development and logistics and transport,” asserts Mr Brito, adding, “We shall also be expanding into the north east of the island where tremendous opportunities lie with the end to the war. We intend to expand our chain of resorts by aggressively pursuing further hotel management contracts in South Asia, the Middle East and South-east Asia. With a unique approach to interventionist management, our new Aitken Spence consultancy arm plans to make inroads in regional markets. “With Sri Lanka on the verge of a boom, we are keen to play amajor role in the development of infrastructure and key services that are particularly in demand in the recently liberated region in the north and east of the country. Building on our management expertise in a myriad of industries, and our experience spanning over 140 years, we will continue to grow the company in ways that serve both our country and our employees,” concludes Mr Brito. With its wide range of services and products, dynamic leadership, pioneering approach to business, and the end of the civil war in Sri Lanka, Aitken Spence surely can look forward to continuing success and prosperity.

As seen on EuroAsia Industry Magazine – Issue 8 – 2009

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