Dhaka's five-star boom

(Top) Dressed in traditional sherwani and paggree, a doorman greets at the entrance to The Westin Dhaka, a five-star hotel in the capital, yesterday. (Bottom) The photo taken yesterday shows the under-construction five-star hotel, Holiday Inn, on Airport Road in Dhaka. Photo: Syed Zakir Hossain and Amran Hossain

Dressed in the finest traditional sherwani and paggree, the doorman ushers guests into the marble lobby of The Westin Dhaka, the capital's latest five star hotel situated in the heart of Gulshan.
Inside groups of foreign businessmen and guests recline in the trendy egg shaped chairs, sipping coffee and eating delicate pastries. It is midmorning and the café is doing a brisk trade, as it has done since the hotel was opened in July last year.
“Everyday we receive different types of guests with a wide range of business people, including garment merchants, telecom investors, donor agency delegates, as well as a number of tourists,” said Mahbubur Rahman, communication director of The Westin.
The Westin is busy, but it is not alone. In recent years, the hospitality sector in Bangladesh, has been booming with the five star hotel segment a symbol of the increasing number of well off visitors coming to the country.
In the past two years three new five star hotels have opened in Dhaka and at least three more are expected to open in the next few years.
Industry experts said the capital now has around 1250 five star rooms, and while the hotels only reach full occupancy in the winter months, an average occupancy rate of around 75 percent is easily enough to keep the business profitable.
One of the major drivers of the growth has been the increase in foreign business people visiting the country as both the garment and telecom industries have taken off. In recent months the political stability has also helped attract visitors. Moreover the market is forecast to grow further in coming years.
Leading the boom have been the newly opened hotels, the 235-room Westin, the 204- room Radisson Water Garden and The Dhaka Regency, which has 110 rooms currently in operation and will be adding another 250 in the next 12 months.
All three hotels have been built in the north of the city, exploiting better access to Zia International Airport and the garment belt in Ashulia-Savar as well as the headquarters of the major mobile telecom operators.
They are also either inside, or close, to the capital's diplomatic zone and therefore largely unaffected by hartals, enforced general strikes that bring commercial activity in the rest of the city to a standstill.
They are competing with the city's more established names, The Dhaka Sheraton in Shahbagh and the Pan-Pacific Sonargoan in Karwan Bazar.
Noor Ali, managing director of Westin, said the hotel already had an occupancy rate of 70 percent, and claimed the room revenue at the hotel is 30 percent higher than that of his rivals.
Ali also said the Westin had gained at least 25 percent of the total five star market.
“The Westin now provides six star facilities to the guests and I dream of a seven star hotel in the country, which would be possible in near future,” he added.
But the Westin will have to work hard to catch up with Radisson Water Garden Hotel, opened in February 2006. The hotel made an operating profit of more than US$6.721 million in 2007, a record for a hotel in Bangladesh.
Radisson claims a market share of about 40 percent with an occupancy rate of over 80 percent, according to Sabreena Rahman, senior public relations executive at the hotel
Sabreena also said the hotel has earned the highest revenue of US$ 13.377 million last year, mainly as a result of a solid growth of business customers.
Dhaka Regency, a British-Bangladesh venture by non-resident Bangladeshis (NRBs) opened in April 2007 and is yet to enter full operations.
Shahid Hamid, general manager of Dhaka Regency, said though the hotel is newly opened and still to complete a whole year in business, the hotel occupancy rate exceeded 50 percent.
“The hotel is now partially open and we hope to come into full operation by the end of August this year,” said Hamid.
“As the country's business sector is growing, we are optimistic to receive more guests, who prefer a sound environment outside, but close, to the central town,” he added.
But the older hotels are fighting back. The Dhaka Sheraton recently completed a major renovation and last year made an operating profit of US$ 4.16 million, despite the intense competition.
“We have to compete with new hotels opened in recent years, yet the Sheraton is still a premier and bigger hotel in terms of its accommodation and services,” said Jayed Shams Mahbub, assistant marketing and communications manager at Dhaka Sheraton Hotel.
Dhaka Sheraton has an average occupancy rate of 85 percent, while the hotel claimed a 27.5 percent of total market share, said Mahbub.
“As a state-owned hotel, the Dhaka Sheraton generally accommodates the important guests coming to Dhaka on state visit,” said Mahbub, adding that they are now targeting business delegates.
In worst shape is the Pan Pacific Sonargaon Hotel that has had to fight to survive at a time when its huge renovation project has been delayed and mired in controversy due to a corruption scandal.
“We have already completed our renovation work on the third floor and hope to complete the whole by the end of April this year,” said MA Awal, sales director of the hotel.
Awal also said new management has taken over the hotel, targeting to relaunch it by the end of April.
Yet in the next few years competition is likely to become even more intense with at least three other international chain hotels Hilton, Holiday Inn and the Intercontinental planning to open in the city. Construction work has already began on the Hilton in Begun Bari and the Holiday Inn and Intercontinental near Zia Airport.
Mahmudul Haque, deputy general manager of Millennium Developers, the local management authority of Hilton Hotel, said they would finish their construction by the end of December 2011.
But will the addition of hundreds of new beds be more than the market can take? Mahmudul Haque, doesn't see a problem, instead enthusiastically praising the virtue of competition in the sector.
He was backed by Shahid Hamid, general manager of Dhaka Regency. “A competitive market is sustainable and will bring reasonable pricing that will attract more guests.”
However Noor Ali, managing director of Westin, was more cautious. “To make the sector sustainable, the government needs to change the policy on taxation, reduce visa difficulties and improve tourist spots,” said Ali, adding that the government should issue on-arrival visas and lessen taxes on food and drink.
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