Luxury hotels log higher revenue: half of it comes from food, beverage

Food and beverages are major sources of revenue for most of the luxury hotels in Bangladesh compared to their earnings from renting out rooms as operators have stepped up efforts to drive sales.

In contrast, hotels located in the areas near the Hazrat Shahjalal International Airport are logging higher revenues from rooms while they struggle to generate earnings from dining and attract corporates to hold events.

Food and beverage sales accounted for 49 percent of the revenues generated by the six luxury hotels that published financial reports for the fiscal year of 2022-23.

Of them, InterContinental Dhaka earned a revenue of Tk 111 crore from food and beverage sales, which was around 66 percent of the total revenue.

Bangladesh Services Ltd, the owning company of InterContinental, turned over Tk 42 crore from rooms in the same year.

"As foods are preferred by the guests from central Dhaka, our hotel is a popular place for hosting events, so revenues from food sales are higher," said Mohammad Atiqur Rahaman, managing director of Bangladesh Services.

However, its relatively long distance from the airport and traffic congestion are the major reasons for not getting enough foreigners as guests, he said.

But after the opening of Dhaka's first elevated expressway in September, Rahaman is hopeful of drawing more foreign guests. "This will increase the occupancy rate in the coming years."

Recently, InterContinental has taken many steps to woo customers. For instance, on its rooftop garden, it is producing organic vegetables that are served to guests.

The company has been incurring losses since 2015 when its renovation started. The loss came down to Tk 85 crore in FY23 from Tk 110 crore in the previous year.

Le Méridien Dhaka clocked the highest revenue from the room segment thanks to its proximity to the airport.

The revenue of Best Holdings, the owning company of Le Méridien, from rooms was Tk 150 crore, accounting for 51 percent of the total turnover. It sold food and beverage items worth Tk 99 crore in FY23, according to the financial report.

"The location is the main factor for the higher room revenue. As a result, the occupancy rate is high," said Abul Kalam Azad, company secretary of Best Holdings.

On average, the hotel's occupancy rate is 70-75 percent and it sometimes reaches 100 percent.

To meet demand, the hotel is adding 58 more rooms. It already has the highest number of rooms among the hotels in Bangladesh.

While the location is a blessing for the company, its distance from central Dhaka explains why its revenue from dining is lower.

"We don't get adequate events and guests," Azad added.

Apart from the two, Unique Hotel, the owning company of Sheraton Dhaka and Westin Dhaka, Sea Pearl Cox's Bazar Beach Resort & Spa, and Peninsula Chittagong, have also published their financial reports for FY23.

Westin Dhaka sits at the heart of new Dhaka while it is not far away from the airport. So, the turnover from the accommodation facility and food is almost equal.

The hotel turned over Tk 97 crore from room rents and Tk 92 crore from food and beverage sales.

A senior official of Unique Hotel & Resorts said the hotels are situated in the business hub and the diplomatic zone.

"Our hotels are also attractive to corporates, foreigners and local guests."

Unique Hotel's profits skyrocketed to Tk 192 crore in FY23 from Tk 99 crore in the previous year.

The profit jumped mainly because of extraordinary gains from the selling of its shares in a power plant. The company recorded a capital gain of Tk 112 crore by selling 11.76 percent shares in Unique Meghnaghat Power to Nebras Power.

The revenue from the sales of food items is also higher than that of accommodation for Pan Pacific Sonargaon.

"Room rents account for 60 percent of our revenues while the food and beverage sales constitute the rest," said Mohammed Nafeuzzaman, public relations manager of the hotel.

All types of events typically organised by corporates and the government are held at the hotel, he said. The occupancy rate is 45 percent to 50 percent.

The official says the hotel business has rebounded following the easing of coronavirus restrictions. Blockades, however, have impacted the business as the movement of guests is restricted to some extent.

In the port city, Peninsula Chittagong incurred a loss of Tk 4 crore in FY23, reversing from a Tk 2.24 crore profit a year ago.

The company saw a revenue of Tk 20 crore from food and beverage sales. Rooms generated Tk 15 crore in revenue.

The profit of Sea Pearl Cox's Bazar Beach Resort & Spa surged to Tk 70 crore from Tk 16 crore, on the back of a Tk 73 crore revenue from the food and beverage segment and Tk 31 crore from room rents.

"There is no way to raise the revenue until the number of rooms goes up or the rate increases. However, there is huge potential to earn more revenues from food sales by giving special offers," said Md Azaharul Mamun, company secretary.

"We are looking at all potentials."

The hotel has opened a new restaurant that offers dishes similar to those popular among locals. The price is also reasonable, Mamun said.

"Some people who come to visit our water park also eat at our restaurants."

"Moreover, many events are organised on the beach and the organisers buy food from us. The food delivery business is bringing additional revenues."