• Sunday, March 01, 2015

Hotels in deep trouble

Md Fazlur Rahman

People are losing jobs as hotels, resorts and cottages are closing down amid the ongoing blockades and shutdowns that brought their occupancy rates to a low never seen before.
Industry people said occupancy rates in plush hotels in Dhaka have come down to 20 percent, and below 10 percent at hotels, resorts and cottages outside the capital, although the season used to see the rate going over 80 percent.
"We had been going through a tough period up to October. But the condition has worsened since November. All bookings were cancelled," said Hakim Ali, president of Bangladesh International Hotel Association.
"We have never seen such a drop in business," he said, admitting that the occupancy of his own Agrabad Hotel in Chittagong was 15 percent on Tuesday night.
But the most disturbing development is coming from Cox's Bazar, the country's most popular tourist destination, where many workers have lost jobs in the last few months as resorts and cottages are closing down.
About 50 hotels and resorts and 35 restaurants have shut down in the last two months, said Rezaul Karim Reza, joint secretary of Hotel, Motel and Guest House Owners Association in Cox's Bazar.
"We have been in troubles since February last year. We had hoped we would be able to recoup all losses in December, but it did not realise," he said.

He said many hotel and resort owners would be bankrupt if the current situation lingers, as most of them have constructed their businesses on loans from banks.
Reza himself borrowed Tk 1.39 crore from a state-run bank in 2004 to set up his 56-room hotel, Albatross Resort, in Kolatoli. He has so far repaid Tk 1.50 crore with Tk 1.30 crore still unpaid.
He said he cannot pay electricity bills as there is no business. He closed down his restaurant three months ago, with 27 staffers losing job, after incurring losses for several months.
"The economic activities in the beach city are in disarray as its economy is completely dependent on tourism."
The town's 400 hotels and resorts, which had 20,000 regular staff members and 50,000 irregular ones, now employ only 2,000, said Abul Kasem Sikder, the association's general secretary.
"These workers are going through tough times, since many of them had been employed in the sector for years and do not excel in other trades," he said.     
The situation is completely opposite to what the largely untapped hospitality and tourism sector witnessed a few years ago.
The hospitality sector has seen substantial investments in recent years, thanks to Bangladesh's steady economic growth over a decade and rise in per capita income.
The thriving economy brought in international brands such as Radisson and Westin as industry people say the country is underserved in terms of quality hotel accommodation.
A number of international hotels have also started operations in the tourist destinations such as Chittagong, Cox's Bazar, Sylhet and Khulna.
Analysts said internal tourism has grown tremendously keeping pace with the rising income of people. As the number of foreign tourists is also going up, tour operators are developing packages for them.
Rubina H Farouq, managing director of Dhaka-based Institute of Hotel Management and Hospitality, said Bangladesh had been doing well in all aspects of tourism, with new hotels and cottages sprouting across the country to cater for the growing demand.
But suddenly, everything has changed.
The unprecedented political violence and blockades have jolted the services sector, which includes the tourism and hospitality sector and accounts for 54 percent of the economy.
Officials of a number of international hotels said they have failed to reach their revenue target for 2013 due to a low presence of business travellers from around the world. They, however, declined to give any financial figures.    
They said the rough patch in business, which intensified in October and continued through December, would bleed the business even in January.
The situation has worsened so much that the Bangladesh International Hotel Association has called for a meeting in Dhaka on Sunday to find out ways to overcome the biggest ever fall in the business.
Hakim Ali, the president of the association, said the hotel business has gone from bad to worse in the last two months.
"Everybody around the world is watching the situation in Bangladesh. If they do not get positive news they will not fly to the country," he said.
"If the current situation continues, the country's tourism sector will collapse completely."
Zahid Hussain, lead economist at World Bank's Dhaka office, said Bangladesh had the potential to develop tourism like Malaysia, Thailand and Singapore riding on the destinations such as the Sundarbans and Cox's Bazar.
"If we can overcome the situation quickly, the sector would be able to offset the losses incurred so far," he said.
The economist also said Bangladesh would not be able to have a permanent tourism sector if political disturbance recurs every four to five years, as such repetitions would make the situation hard for investors to recoup investment.
Rubina said new investment would not come to the sector if investors do not get assurance.   However, the picture is not entirely gloomy.
Jamuna Builders, a real estate concern of Jamuna Group, is going ahead with its construction work to set up the largest hotel in South Asia on time, said Mohammed Alamgir Alam, director of Jamuna Group for marketing, sales and operations.
He said the 709-room JW Marriott Dhaka, with US luxury hospitality chain Marriott International as management operator, would open at least one year ahead of its schedule of June 2017.
"We think the current political impasse will be short-term, and we will be able to overcome it very soon," he said.
The travel and tourism sector raked in Tk 19,300 crore, or 2.1 percent of the GDP, in 2012, and was forecasted to improve on the figure by 7.7 percent in 2013, a study by World Travel and Tourism Council found.


Published: 12:00 am Friday, January 10, 2014

Last modified: 8:35 pm Friday, January 10, 2014

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