Annual Report 2024/2025

The Fortress Resorts PLC

Annual Report 2024/25

The Dawn of a

New Era

Contents

Group Financial Highlights 3

Chairman's Message 6

Board of Directors 9

Management Discussion and Analysis 14

Sustainability Review 18

Risk Management 20

Annual Report of the Board of Directors on the

Affairs of the Company 26

Corporate Governance 32

Responsibility Statement of Chairman/

General Manager and Chief Financial Officer 42

Statement of Directors' Responsibility for Financial Reporting 43

Remuneration Committee Report 44

Audit Committee Report 45

Related Party Transactions Review Committee Report 47

Nominations and Governance Committee Report 49

Financial Report

Independent Auditor's Report 55

Statement of Profit or Loss and

Other Comprehensive Income 58

Statement of Financial Position 59

Statement of Changes in Equity 60

Statement of Cash Flows 61

Notes to the Financial Statements 62

The Dawn of a

New Era

This year marked a transformative chapter for The Fortress-a harmonious blend of heritage and renewal. As we embrace a new era, our extensive refurbishments have breathed new life into every stone, suite, and space, enhancing the timeless elegance our guests have come to love. With a renewed vision and revitalised offerings, we are proud to have not only redefined luxury within our walls but also surpassed our sales targets. This is more than a revival-it's a bold step into the future of hospitality, where excellence is not just preserved, but elevated.

Group Financial Highlights

Chairman's Message

J R Gunaratne

Chairman

It is with great pleasure that I present to you the Annual Report of The Fortress Resorts PLC for the financial year 2024/25. This reporting period has been a particularly pivotal one for the organisation, as we continued

to operate amidst an ever-evolving global landscape while also seising new opportunities to build on the strong foundations we have laid in past years. Our ability to adapt with agility, respond strategically to challenges, and remain committed to our long-term vision

has enabled us to deliver commendable performance and sustained value to all stakeholders. The resilience and strategic foresight demonstrated by our team over the past year is worthy of recognition, and I am proud to note the progress we have made together.

The global macroeconomic environment in 2024 was characterised by cautious optimism amid persistent volatility. While overall global GDP growth held steady at 3.2%, in spite

of considerable pressure from geopolitical tensions, inflationary concerns, and divergent monetary policy approaches across economies. These externalities impacted consumer sentiment, travel patterns, and capital flow dynamics worldwide.

Sri Lanka, however, marked a meaningful economic turnaround during this period. Emerging from one of the most challenging crises in its post-independence history,

the country posted its strongest GDP growth in over six years, alongside notable improvements in inflation, fiscal stability, and exchange rate performance. The resurgence in inbound tourism underscored by over 2

million tourist arrivals, was not just symbolic of renewed global confidence in Sri Lanka, but also an essential contributor to the national economy. For the hospitality sector, these developments translated into more favorable operating conditions, improved investor sentiment, and opportunities for market expansion.

This growth was not only reflective of pent-up demand, but also a validation of the country's efforts to reposition itself in the global tourism map. For Fortress, these trends translated

into renewed opportunity to expand our market share, deepen customer relationships, and reassert our brand positioning among discerning global travelers.

At Fortress, we approached this dynamic external landscape with measured foresight and disciplined execution. Our strategic response centered around digital transformation, operational efficiency, and guest experience enhancement. We

significantly expanded our digital marketing footprint, strengthened our brand presence across key OTAs, and increased engagement in our highest-performing source markets. These actions resulted in improved channel contributions and supported our recovery in occupancy and yield.

In operational terms, we adopted a proactive stance on resource optimisation and sustainability. The commissioning of our biomass boiler marked a milestone in our transition toward energy efficiency and cost containment, reflecting both our environmental commitment and financial prudence. Our focus on experiential travel

offerings, aligned with evolving global tourism preferences, allowed us to reinforce our brand as a destination of choice for wellness, celebration, and high-value personalised experiences.

Our results for the year affirm the effectiveness of our strategy. We achieved an annual average occupancy of 52%, with significant peaks during the high season that underscored the strength of our demand generation efforts.

Our digital marketing campaigns and OTA partnerships played a critical role in boosting visibility and bookings, with online room nights growing by 26% and accounting for 37%

of total room nights, up from 30% the previous year.

From a financial standpoint, we delivered a 9% growth in revenue, reaching Rs. 1,006 million, alongside a 14% increase in profit before tax and an 11% increase in net profit. Every major revenue stream-from rooms and F&B to spa and sundry services-showed positive year-on-year growth, signaling the broad-based nature of our recovery. Operational metrics, including improved guest satisfaction scores and an

over 10% repeat guest ratio, reinforce our focus on delivering exceptional experiences consistently.

As always, our commitment to robust governance was central to everything we achieved. The Board remained steadfast in its oversight responsibilities, ensuring alignment between strategic direction and execution. Throughout the year, we emphasised the integration of sustainability into governance frameworks, reinforced our internal controls, and facilitated management accountability through structured performance reviews.

These efforts were instrumental in safeguarding shareholder interests while also building resilience into our business model.

In an increasingly complex and interconnected operating environment, good governance is not merely a compliance obligation-it is a strategic asset. Our adherence to ethical practices, transparent disclosures, and stakeholder engagement principles continues to underpin our longterm credibility and investor confidence.

Sustainability is a pivotal aspect of our business strategy. In 2024/25, we continued to make meaningful progress on our ESG commitments. The introduction of a biomass boiler not only helped us cut down on diesel use by 90%, but also demonstrated how

Chairman's Message

environmental action can drive cost efficiency. Our water and waste management programs contributed to more responsible resource consumption, while our biodiversity efforts and partnerships supported the preservation of our coastal environment.

Beyond environmental stewardship, we expanded our social impact through community engagement, youth training, and local procurement. Our internal ESG

governance mechanisms were strengthened, with regular audits and staff training reinforcing a culture of responsibility and transparency. While our Green Globe certification remains in abeyance post-COVID, we continue to maintain its standards across all dimensions of operations.

Looking ahead, our confidence is reinforced by both internal momentum and external opportunities. Sri Lanka's macroeconomic outlook continues to improve, with the national tourism strategy aiming to build on the gains achieved in 2024/25. The ambitious national goal of attracting 3 million visitors

in 2025 provides a compelling growth backdrop for the hospitality sector. Fortress is well-positioned to participate meaningfully in this expansion, supported by our strong operational foundation, strategic clarity, and well-established brand presence in both mature and emerging source markets.

In alignment with this positive trajectory, our strategic priorities for the year ahead include consolidating the gains made over the past year, continuing our investments in service innovation, digital engagement, and guest personalisation, and further amplifying our community and environmental impact.

We have set forward-looking targets such as increasing occupancy to 62%, enhancing guest satisfaction benchmarks, and further reducing our environmental footprint-initiatives that will strengthen our competitive position while staying true to our sustainability ethos.

On behalf of the Board, I would like to thank our partners and suppliers for their continued trust, our employees for their dedication, our guests for choosing us, and all our stakeholders for being part of this shared journey. Together, we remain committed to shaping a sustainable and prosperous future for The Fortress Resorts and Spa, and creating sustained value on behalf of all our stakeholders.

J R Gunaratne

Chairman

Board of Directors

Mr. Jitendra Romesh Gunaratne

Chairman

Mr. J R Gunaratne is an experienced business leader with a background in strategic planning, production and distribution, industrial relations, and change management. With

a career spanning the food and beverage, plantation, and leisure sectors, he has been instrumental in driving operational

improvements, organisational development, and workforce transformation across various enterprises.

He has previously held directorships in several listed and private entities within the John Keells Group. In addition to his corporate roles, Mr. Gunaratne has contributed to national policy and industry development as

a Member of the Food Advisory Council of the Ministry of Health and the Council for Hotel & Tourism of the Employers' Federation of Ceylon. He also served as the Founding Chairman of the Beverage Association of Sri Lanka, underscoring his leadership within the sector.

Currently, Mr. Gunaratne serves as the Non-Executive Chairman of Delmege Limited, Deputy Chairman of Link Natural Products (Pvt) Ltd, and an Independent Non-Executive Director of CIC Holdings PLC, CIC Feeds (Private) Limited, CIC Poultry Farms Limited, Lanka Tiles PLC, and Royal Ceramics Lanka PLC.

Mr. Sumith Adhihetty

Director

Mr. Sumith Adhihetty is a well-known professional in the marketing field and has over 44 years of experience in the finance sector.

He holds directorships in nine other companies, namely: Vallibel One PLC, Multi Finance PLC, LB Finance PLC, LB Microfinance Myanmar Company Limited, Greener Water Ltd., Summer Season Ltd., Summer Season Mirissa (Pvt) Ltd., Summer Season Residencies Ltd., and La Fortresse (Private) Limited, where he serves as a Non-Executive Director.

He was formerly the Deputy Managing Director of Mercantile Investments Limited and has also served as a Director of Nuwara Eliya Hotels Limited, Grand Hotel (Pvt) Limited, Royal Palm Beach Hotels Limited, Tangerine Beach Hotels Limited, Nilaveli Beach Hotels Limited, Mercantile Fortunes (Pvt) Limited, Tangerine Tours Limited, and Security Ceylon (Pvt) Limited.

Mr. Jan Peter Van Twest

Director

Mr. Jan Van Twest counts over 45 years of experience in the hospitality industry in senior Management positions in Sri Lanka, Europe, Australasia and the South Pacific. He graduated from the Ceylon Hotel School, Sri Lanka, in Hotel & Catering Operations and Advanced Hotel and Catering Operations from the Carl Duisburg Centre in Munich, Germany. He is a certified Hotel Trainer with the Chamber of Commerce for Munich

and Upper Bavaria. He is also a graduate of the Technical University of Munich. He is presently, a Director of Summer Seasons Limited.

Board of Directors

Mr. Chatura Vishvajit Cabraal

Director

Mr. Chatura V Cabraal holds a Bachelor of Science (BSc.) degree in Mechanical Engineering with Honours, specialising in

manufacturing and design, from the Missouri University of Science and Technology, USA.

Mr. Cabraal began his career in 2010 as a Management Trainee at John Keells Hotel Management Services and subsequently held the role of Sustainability Engineer at Brandix Lanka (Pvt) Ltd from 2011 to 2014, within

the Energy and Environment Department. He served as the Senior Manager - Estate Management at CHEC Port City Colombo (Pvt) Ltd until October 2023.

He previously served on the Board of the Export Development Board of Sri Lanka and holds directorships at Kelani Valley Plantations PLC as a Non-Executive Director and Renuka City Hotels PLC as an Independent Non-Executive Director.

Mr. Chethiya Minendra Umagiliya Weerawardena

Director

Mr. Chethiya Minendra Umagiliya Weerawardena is a visionary leader with extensive experience in corporate

management and entrepreneurship. He holds a Doctorate in Business Administration from the University of Azteca, North America, and MBA from the University of Suffolk, United Kingdom.

Furthermore he is also conferred with a Master of Law from University of Buckinghamshire.

He is the Chairman of Uni Dil Packaging Limited and Uni Dil Packaging Solutions Limited and serves as a Non-Executive Director of DHT Cement Pvt Ltd, Swisstek Aluminum Limited, Swisstek Ceylon PLC. Renowned for his contributions to both listed and non-listed entities, Mr. Umagiliya has driven growth and innovation across diverse industries.

A Fellow of the Institute of Chartered Professional Managers Sri Lanka and he is also a member of Chartered Institute of Marketing (UK), Chartered Management Institute (UK), and the Financial Management Association (USA). Mr. Umagiliya's leadership continues to inspire excellence and progress in Sri Lanka's corporate landscape.

Mr. Vasantha Leelananda

Director

Mr. Vasantha Leelananda counts over 40 years of experience in the hospitality industry in Senior Management positions in Sri Lanka with the John Keells Group. He served as the Executive Vice President of the Destination Management sector of the John Keells Group from 2005-2018 and Managing Director of Walkers Tours from 1997-2005. He holds an MBA from the University of Leicester. He

was a past president of Sri Lanka Association of Inbound Tour Operators (SLAITO) for four years, a Board Member of the Sri Lanka Convention Bureau (SLCB) from 2003-2007, Sri Lanka Institute of Tourism and Hotel Management (SLITHM) from 2007-2010, and American Chamber of Commerce (AMCHAM) from 2012-2014. He was also a Board Member of the Responsible Tourism partnership affiliated to the travel foundation UK, a Board Member of Sri Lanka Tourism Promotion Bureau (SLTPB) from 2015-2018 and a Director of Sri Lanka Business and Bio Diversity platform.

Ms. Kawshi Amarasinghe

Director

Ms. Kawshi Amarasinghe currently serves as an Executive Director of Vallibel One PLC and as the Group Director for International Business Development and Corporate Social Responsibility. With over a decade

of senior leadership experience, she plays a pivotal role in formulating and driving the Group's strategic business development and research initiatives across a diversified industry portfolio.

Ms. Amarasinghe leads cross-functional teams in executing complex, high-impact projects across the manufacturing, hospitality, retail, and financial services sectors. Her expertise encompasses market research, branding, digital transformation, data-driven marketing strategies, innovation, and business expansion. She works closely with senior leadership teams across all group subsidiaries to enhance strategic decision-making, identify growth opportunities, and ensure alignment with the Group's long-term objectives.

In addition to her corporate responsibilities, Ms. Amarasinghe oversees the strategic direction of DP Education under the Dhammika & Priscilla Perera Foundation, Sri Lanka's largest free education platform.

Ms. Amarasinghe is widely recognised for her ability to combine strategic vision with

operational excellence, delivering measurable

impact across both enterprise and community initiatives.

Industry Contributions and Board Memberships:

• Executive Director - Vallibel One PLC (current)

• Non-Executive Director - Singer Sri Lanka PLC (current)

• Non-Executive Director - Pan Asia Banking Corporation PLC (current)

• Non-Executive Director - Greener Water Ltd. (current)

• Non-Executive Director - Hayleys Leisure PLC (current)

• Chief Executive Officer - Dhammika & Priscilla Perera Foundation (current)

• Alternate Director - Hayleys PLC (October 2019 - June 2022)

Professional and Educational Qualifications:

Ms. Amarasinghe holds a Bachelor's degree in International Studies from The University of Queensland, Australia. She has further enhanced her professional

competencies through globally recognised executive education programs, including the Management Acceleration Programme at INSEAD, France, and Hotel Revenue Management at Cornell University, USA. These credentials, combined with her extensive practical experience, equip her to lead with a global and future-focused perspective.

Ms. Brindhiini Perera

Director

Ms. Brindhiini Perera has earned a Masters in Mechanical Engineering from Imperial College London. Her studies included

comprehensive coverage of subjects such as Manufacturing Technology and Management, Entrepreneurship, Corporate Finance, Statistics, and Mathematics.

She currently serves as a Non-Executive Director on the Boards of Vallibel One PLC, Royal Ceramics Lanka PLC, Lanka Tiles PLC, Lanka Walltiles PLC, Haycarb PLC, Dipped Products PLC, Hayleys Fabric PLC, The Kingsbury PLC, Hayleys Leisure PLC, and Singer (Sri Lanka) PLC. She also serves on the Boards of Eurocarb Products Ltd (UK), Delmege Limited, Otwo Biscuit (Private) Limited, The Canbury Biscuit Company Limited, Manatee Clothing Company (Pvt) Ltd, and the Dhammika & Priscilla Perera Foundation.

Board of Directors

Mrs. Roshika Nishani Pallegama

Director

Mrs. Roshika Nishani Pallegama is a seasoned finance professional with over 25 years of experience, specialising in the hospitality, waterparks, and facility management sectors. Nearly 20 years of her career were spent with the renowned Jumeirah Group in Dubai, including a tenure at the iconic Burj Al Arab.

Finance at Resplendent Ceylon, where she oversees financial operations across five luxury boutique properties, including Cape Weligama, Wild Coast Tented Lodge, and Ceylon Tea Trails.

Mrs. Pallegama holds an MBA from the University of Sunderland and a Certificate in Asset Management & Owner Relations from Cornell University.

Prior to joining Resplendent Ceylon, she served as Director of Finance at Mövenpick Hotel Colombo, a non-listed entity owned by Softlogic City Hotels (Pvt) Ltd.

She currently serves as Vice President -

Mr. Amrit Merrill Joseph Fernando

Director

Mr. Amrit M J Fernando represents the third generation of the Fernando family, founders of Dilmah Tea. He is the grandson of Merrill J. Fernando, the visionary behind the creation of Dilmah in 1988 as a single-origin, pure Ceylon tea brand. Mr. Fernando holds a B.Sc. (Hons) in Marketing and Management from the University of Exeter, United Kingdom.

He currently serves as a Brand Marketing Specialist at Dilmah Tea, becoming the first member of the third generation to join the family business. He is also a Director

at Suwa Arana, Sri Lanka's first Paediatric Palliative Care Centre, representing the MJF Foundation. In addition, he serves as Chair of the Agriculture & Food Security Committee of the International Chamber of Commerce, Sri Lanka.

Mr. Fernando is a Non-Executive Director of Talawakelle Tea Estates PLC and The Ceylon Spice Company (Private) Limited.

Mrs. Devika Weerasinghe

Director

Mrs. Kamani Devika Weerasinghe is a senior finance professional with over 30 years of experience in finance and management.

She began her career at Price Waterhouse Coopers before moving to the John Keells Group, where she held various finance roles and directorships in both private and publicly listed companies. Before retiring in June 2024, Mrs. Weerasinghe served as the CFO for the Transportation Industry Group, Plantations services and Information Technology sectors with in the John keells Group. She is an associate member the Chartered Institute of Management Accountants UK, and holds a Bachelor's Degree in Business Administration from the University of Sri Jayawardanapura.

Independent Non-Executive Director at Printcare PLC, Vallibel One PLC, Vallibel Power Erathna PLC, and Lanka Ceramics PLC.

Mr. Ashen Joseph

Director

Ashen Joseph is a seasoned business professional and academic with expertise in customer experience management,

organisational psychology, and data analytics. Currently serving as an Academic in Business & Management at the University of Buckingham, England. Ashen has extensive experience in business development, higher education, and service excellence across diverse industries. He is pursuing a DPhil

in Business by Research, with a focus on service well-being in the luxury hospitality sector at the University of Buckingham.

Additionally, he holds an MSc in Customer Service Management (Distinction) and a BSc in Psychology (Hons) from the University of Buckingham.

Mr. Joseph currently serves as a Non-Executive Director at NJ Consultants (Pvt) Ltd.

Management Discussion and Analysis

The global economic landscape in 2024 was characterised by resilience amidst significant uncertainties. Global GDP growth stabilised at 3.2%, slightly trailing pre-pandemic trends, with the International Monetary Fund forecasting

a modest acceleration to 3.3% in 2025. While the United States demonstrated robust performance (2.7% growth), Europe and China experienced more subdued recoveries. Growth in emerging and developing markets continued at a steady pace, led by India and ASEAN countries-key source regions for Sri Lanka's tourism sector.

Inflationary pressures eased globally, though policy responses varied. While some central banks began cutting rates, others adopted

%

a cautious stance due to persistent services inflation. Core inflation hovered just above 2% on average, while certain emerging markets faced renewed inflation volatility. Financial conditions remained broadly accommodative, although a stronger US dollar and capital outflows tightened liquidity in some emerging economies.

The macroeconomic recovery was driven by effective fiscal management, declining inflation, and rising business confidence. Structural reforms and the near-completion of external debt restructuring significantly boosted international credibility. The Central Bank maintained a supportive monetary policy, resulting in lower interest rates and improving credit conditions for households and businesses-beneficial for the tourism and hospitality sector.

Sri Lanka's inflation landscape shifted dramatically. After peaking early in the year due to VAT hikes and volatile food prices, headline inflation dropped to -1.7% by year-end, with average annual inflation easing to just 1.2%. Lower utility costs, stronger currency performance, and subdued domestic demand played a role in easing cost pressures for service providers, including hotels.

The external sector strengthened considerably. The Sri Lankan rupee appreciated by 10.7% against the US dollar, backed by current account surpluses and rising inflows from remittances and tourism. By year-end, the exchange rate stood at Rs. 292.58 per USD. This appreciation helped reduce the cost of imported goods and services, aiding operational efficiency for resorts reliant on imported inputs. Foreign reserves improved significantly, supported by the Central Bank's record net forex purchases.

These macroeconomic dynamics provided a more stable operating environment for the hospitality sector, improving affordability for local travelers and boosting investor confidence across the industry.

Geopolitical instability across Europe, the Middle East, and Asia, along with ongoing trade policy uncertainties, continued to weigh on investor sentiment and trade momentum. Meanwhile, global commodity price movements were mixed. Oil prices softened due to weaker Chinese demand and increased supply, while food prices edged up, partly due to weather-related disruptions. These global conditions influenced travel decisions and disposable income in key source markets for Sri Lankan tourism.

Sri Lanka's domestic economy demonstrated encouraging signs of recovery in 2024. The country exited its worst economic crisis in recent history with stronger-than-expected real GDP growth of 5.0%-the highest

since 2017. All four quarters posted positive growth, led by industrial recovery and a rebound in tourism-linked services such as accommodation and transport.

Figure 1.8: Annual Real GDP Growth Rates (a)

15

10

5

0

5

(10)

(15)

4.2

5.0

(4.6)

(2.3)

(7.3)

(20)

2020

2021

2022

2023

2024

Agriculture

Industry

Services

GDP

Labour market conditions remained relatively subdued in 2024, with a slight decline in the economically active population and lower labour force participation. However, the

unemployment rate improved marginally to 4.4%. A notable increase in overseas employment continued to relieve pressure on the domestic job market. Within the hospitality industry, a more stable macroeconomic backdrop led to greater staff retention, wage stability, and improved morale-factors critical to maintaining service excellence in the leisure sector.

The decline in interest rates created favorable conditions for financing and operational expansion. The Central Bank reduced policy rates by 125 basis points, with short-term market rates following suit. Lending rates across banks eased, particularly for SME

and hospitality-linked credit products. Real interest rates turned positive, boosting savings while facilitating affordable borrowing-an important enabler for ongoing investment in infrastructure and guest facilities within the tourism sector.

The Sri Lankan tourism industry demonstrated a remarkable resurgence in 2024, marking a significant milestone by surpassing 2 million tourist arrivals for the first time since 2018.

With 2.14 million arrivals by the end of March 2025, the industry recorded a 19.7% year-on-year increase, supported by extensive global marketing campaigns, the easing of travel advisories, and enhanced government efforts to position Sri Lanka as a prime destination for luxury, wellness, and experiential tourism.

Geopolitical shifts in the region, notably tensions between India and the Maldives and the Russia-Ukraine war, diverted tourists to Sri Lanka, reinforcing its status as a preferred alternative. Government-led initiatives such as visa-free entry for selected countries, promotional roadshows in India, Europe, and Australia, and recognition at global tourism forums significantly contributed to this rebound.

2023. This impressive growth can be attributed to a combination of factors: the easing of global travel restrictions, effective promotional efforts, and growing traveler confidence in Sri Lanka as a safe and desirable destination.

The strongest growth was recorded in January 2024, which saw a 103.08% increase over the previous year, likely driven by holiday travel trends and favorable weather. December emerged as the peak month for tourist arrivals, with 248,592 visitors, reinforcing the island's attractiveness as a winter destination. In contrast, May 2024 saw the lowest monthly arrivals at 112,128, reflecting seasonal travel dips and possibly less appealing weather conditions.

This pattern highlights the seasonal nature of tourism in Sri Lanka, where monthly performance is influenced by climatic conditions, global travel calendars, and market-specific dynamics.

From a regional perspective, Europe remained the dominant contributor, accounting for 50.67% of total arrivals. This continued preference reflects deep-rooted travel connections, efficient air access, and the success of long-standing promotional campaigns. The Asia and Pacific region followed closely with 41.91%, underscoring the importance of regional proximity and connectivity in driving inbound tourism.

Other regions contributed more modestly: the Americas (5.29%), Middle East (1.42%), and Africa (0.7%). These numbers indicate untapped potential, suggesting future growth opportunities through enhanced air links and market-specific strategies.

In terms of individual markets, India led as the top source, delivering 20.3% of all tourist arrivals, supported by geographic proximity, cultural ties, and improved bilateral relations. Russia (9.8%), the United Kingdom (8.6%), Germany (6.6%), and China (6.4%) also featured prominently, with arrivals bolstered by tailored promotions and strong air connectivity.

Secondary markets such as Australia (4.4%), France (4.3%), USA (2.9%), the Netherlands (2.4%), and Maldives (2.3%) further emphasised the global reach and growing diversity of Sri Lanka's tourism base. This spread mitigates risks associated with over-reliance on any one region and enhances the sector's resilience.

1,040,445

Simultaneously, global tourism trends such as wellness and retreat travel, local experiences, personalisation, and celebratory travel aligned with Fortress's offerings. This allowed the resort to capitalise on emerging traveler preferences, enhancing its market appeal.

In this backdrop, the year 2024 marked a significant turning point for Sri Lanka's

tourism sector, demonstrating robust recovery following several years of disruption. Total tourist arrivals surged to 2,053,465, reflecting

a 38.07% year-on-year increase compared to

108,678

5.29%

50.67%

Africa

14,441

0.70%

1.42%

41.91%

Management Discussion and Analysis

A significant share of arrivals in 2024 was attributed to leisure and vacation travel, affirming Sri Lanka's image as a recreational and cultural destination. Tourists visiting for pleasure included:

These figures indicate a strong orientation toward beach holidays, cultural exploration, and wellness tourism, aligning well with the country's strategic goals of promoting high-value experiences over mass-market travel.

Fortress adapted strategically to both global and local challenges in 2024/25 by implementing forward-looking and data-driven measures:

• Digital Transformation & Marketing: The resort increased digital marketing investments, optimising presence on OTAs including Booking.com, Agoda, Expedia, and its own website. The use of PPC advertising and targeted campaigns drove a 26% YoY increase in online room nights.

• Operational Adjustments: Menu engineering based on local ingredients helped manage cost structures amidst global supply chain fluctuations. A biomass boiler project, completed

  in February 2024, reduced diesel consumption by 90%, saving Rs. 15 million.

• Talent Retention & Development: Fortress retained top-tier talent with above-industry salary increments and trained hospitality school interns during the offseason.

• Sustainability Focus: Initiatives included reducing water and energy use per occupied room night, eliminating plastic, and reusing treated water for gardening- positioning Fortress as a responsible tourism operator.

• Risk Mitigation: The hotel developed Business Continuity Protocols to manage geopolitical risks, improved scenario planning for macroeconomic shifts, and expanded its supplier base to counter inflationary pressures.

In 2024/25, The Fortress Resort & Spa executed a focused and data-driven marketing strategy that directly translated into increased bookings, improved revenue mix, and enhanced brand visibility across global and emerging markets. Anchored by digital acceleration and platform diversification, the

resort optimised its presence across key online travel agencies (OTAs) such as Booking.com, Agoda, Expedia, SLH, and its official website. These platforms collectively contributed 37% of total bookings, up from 30% the previous year, with a 26% YoY increase in online room nights-highlighting the return on investment from aggressive PPC advertising and targeted campaigns.

We meticulously analysed travel patterns to amplify our visibility in top-performing feeder markets, particularly the UK, Germany, France, and India. The hotel's presence at ITB Berlin and ILTM London fostered relationships

with high-value tour operators such as Kouni, Trailfinders, and TUI, which led to tangible conversions during the peak season. The monthly advertising budget was ramped

up to USD 3,000 to drive awareness and engagement, especially in Q3 and Q4, aligning with the global tourism surge.

Fortress strategically positioned itself as a destination for wellness, celebratory, and personalised travel-trends aligned with global demand. Wedding and anniversary events

alone contributed over 5% of total revenue. High repeat visit rates and a CSI (Customer Satisfaction Index) nearing 90% reflect not only superior guest experiences but also the effectiveness of brand storytelling across digital touchpoints.

The year began on a positive note, with April 2024 achieving 71% occupancy, signaling a turnaround from previous low-demand cycles.

Despite traditional offseason dips in May (17%) and June (27%), performance improved steadily through the year, peaking in February 2025 at 77% occupancy.

Total occupancy for the year averaged 52%, up from 50% in 2023/24. This improvement was attributed to better OTA performance, strategic marketing efforts, and growth in

bookings from both traditional (UK, Germany, France) and emerging markets (India, Israel). Guest satisfaction remained high, with a

CSI (Customer Satisfaction Index) close to 90% and a repeat customer rate above 10%. Fortress also maintained its standing as a venue for celebratory travel-weddings and anniversaries contributed over 5% of annual revenue.

The financial year 2024/25 was marked by solid top- and bottom-line growth for The Fortress Resort & Spa, reflecting the successful execution of its marketing

strategies, operational improvements, and favorable market conditions. Total revenue reached Rs. 1,006 million, recording a 9% increase over the previous year's Rs. 921 million. Gross profit improved by 12%, climbing to Rs. 715 million from Rs. 639 million, underscoring enhanced efficiency and better margin management. Profit before tax grew

by 14% to Rs. 305 million, while profit after tax rose by 11% to Rs. 236 million. These gains translated into earnings per share of Rs. 2.13, up from Rs. 1.91 the previous year, reflecting a 12% increase and highlighting the company's improved profitability.

A significant contributor to the overall financial performance was a six-fold increase in other income, which rose from Rs. 3 million to Rs. 21 million. This provided additional stability and diversified income streams. The company's balance sheet also strengthened during the year under review. Total assets increased by 11% to Rs. 2,411 million, driven by a 21% growth in current assets and a 2% uptick in fixed assets. Meanwhile, total equity expanded by 13% to Rs. 2,044 million, reinforcing the company's robust capital base and ability to fund future growth initiatives.

Fortress Resort & Spa. The year commenced strongly with an impressive 71% occupancy in April 2024, marking a significant improvement over the previous year. While May and June saw lower occupancies of 17% and 27% respectively-consistent with historical seasonality-performance gradually picked

up in the subsequent months. Occupancy levels in July and August reached 38% and 52%, respectively, outperforming the same period in the previous year. September and October recorded moderate occupancies of 39% and 49%, impacted by geopolitical tensions and economic instability in some source markets.

The resort's aggressive marketing and promotional campaigns bore fruit during the peak season from November 2024 to March 2025, where occupancy consistently exceeded 65%. December saw occupancy climb to 69%, followed by 68% in January, a peak of 77%

in February, and 66% in March 2025. On an annual basis, the average occupancy increased to 52%, compared to 50% in 2023/24, while the average room rate rose to Rs. 58,606 (USD 197), reflecting improved yield management and higher-value bookings.

Revenue from all key service areas showed healthy growth. Room revenue rose by 8% to Rs. 592 million, while food and beverage revenue increased by 9% to Rs. 343 million.

Spa revenue experienced a substantial 23% increase, reaching Rs. 36 million, and sundry revenue, including income from excursions, transport, and laundry, grew by 25% to

Rs. 35 million. Online booking platforms made a significantly larger contribution to performance, with online room nights increasing by 26% year-over-year, and

accounting for 37% of total bookings-up from 30% in the prior year. The success of these operational strategies contributed not only to higher guest volumes but also to enhanced guest satisfaction and repeat patronage.

Online booking channels contributed 37% of total room nights, up from 30% the previous year. Notably, Booking.com, the hotel website, and Expedia showed strong YoY increases in performance.

Sustainability Review

Our approach to sustainability is a strategic imperative that drives how we operate,

engage, and grow. Our sustainability strategy is designed to consistently create long-term value for all stakeholders by focusing on our economic, environmental, and social impact. As such, we ensure that our operations remain transparent, accountable, and aligned with our future aspirations. This integrated thinking informs our efforts to balance profitability with purpose, particularly as the tourism sector evolves toward sustainability-driven experiences.

Sustainability governance at Fortress is integrated into operational and strategic decision-making. We measure and monitor our ESG progress through clear and practical metrics across environmental, social, and governance domains. Monthly reviews, internal compliance audits, and departmental responsibility allocation ensure that ESG

is embedded in the day-to-day running of the resort. Staff are engaged through regular training programs, and our reporting reflects

our commitment to continuous improvement.

We have implemented a range of energy-efficient solutions, including full adoption of LED lighting, HVAC upgrades, and cold wash laundry systems. A significant achievement

in 2024/25 was the introduction of a biomass boiler, which helped reduce diesel consumption for boiler operations by 90%, from 71,893 litres in 2023/24 to 13,484 litres in 2024/25.

Electricity consumption per room night improved marginally to 170 kWh from 174 kWh, despite increased occupancy. In addition, we have installed solar panels to reduce dependency on non-renewable energy sources and integrated power-saving habits across staff and guest operations. Our ongoing carbon reduction program includes transitioning to low-emission transport

solutions and exploring offsetting mechanisms.

We recognize water as a vital and shared resource. Our water conservation measures include low-flow fixtures, greywater treatment and reuse, and smart irrigation systems for landscaping. In 2024/25, water consumption per room night was 2,755 litres, slightly

lower than the previous year's 2,772 litres. Educational programs for both staff and guests enhance our ability to conserve and reuse water responsibly.

We have a comprehensive waste management program, including the segregation of recyclable, organic, and non-recyclable

waste streams. Composting, recycling, and partnerships with certified waste management services-including e-waste and hazardous material disposal-are integral to our system. We actively reduce single-use plastics and now offer alternatives such as glass bottles

and biodegradable packaging. Excess food is composted or redirected to local farms, supporting a circular economy approach.

Ensuring the health and safety of our guests, staff, and partners remains a top priority at The Fortress Resort and Spa. We comply fully with all local and international health and safety regulations, and continuously monitor risks

to provide a safe and secure environment. Comprehensive health and safety protocols are in place across all guest-facing and back-of-house areas, including hygiene standards for food preparation, pool and spa operations, fire safety systems, and emergency response procedures. Regular training sessions are conducted for all staff on occupational

safety, first aid, and emergency preparedness. Periodic audits and inspections are carried out to ensure that our facilities meet stringent quality and safety benchmarks. These efforts are critical not only to safeguarding wellbeing but also to sustaining guest confidence and trust in the hospitality experience we offer.

We prioritise local sourcing of produce, seafood, crafts, and services to strengthen the regional economy. We engage local vendors, artisans, and farmers to reduce transportation emissions and support inclusive economic growth. A significant portion of our F&B supplies and boutique shop items are sourced locally, reinforcing our commitment to community integration.

We support the nearby school through clean water access projects and facilitate hospitality