The luxury hotel industry in Bangladesh, encompassing both the state-owned and private international chain hotels, has incurred substantial losses amounting to hundreds of crores over the past 15 days due to widespread unrest and ongoing curfew across the country.
According to industry insiders, the market size of the luxury hotel industry is estimated at approximately $2,100 million-worth or accounts for 4 per cent of the nation’s GDP. This sector, following the Covid-19 pandemic, faces yet another major setback as occupancy rates plummet and bookings dwindle.
Industry experts attribute this decline to the vandalisms occurred under the guise of the ongoing quota reformation movement, which has significantly impacted the hospitality sector as they claim that recovery is expected to take months, with strong political stability being crucial for the revival of the sector.
Additionally, a week-long internet blackout has halted new reservations from abroad, while foreign guests have suspended their tours in response to travel alerts issued by various countries against Bangladesh. Adding to the woes, corporate events, seminars, and conferences have also been either rescheduled or cancelled, further exasperating the situation.
Luxury hotels across Bangladesh witnessed a wave of cancellations for nearly all reservations for the remaining days of July and even into August. This recent turmoil compounds the negative international image that emerged after the tragic Holey Artisan terrorist attacks of 2016.
89.50 out of 100
Forbes Advisor has ranked Dhaka as the sixth riskiest city for tourists in its 2024 list, following an evaluation based on seven major risk factors: crime, personal safety, health, infrastructure, natural disasters, and digital security. Bangladesh received a score of 89.50 out of 100.
Research by Forbes Advisor focuses solely on security aspects, taking into account metrics including the travel safety rating provided by the US State Department, the crime risk per city from Numbeo, and personal security risk data from The Economist.
Meanwhile, several embassies, including the US Embassy, have evacuated their nationals from Bangladesh and the USA issued a travel alert, leading to a significant drop in foreign visitors. This has directly impacted the hotel industry. Additionally, the ongoing curfew has kept domestic visitors indoors, which is also harming the hospitality business.
Unique Hotel and Resorts PLC Chief Executive Officer (CEO) MdShakawathHossain stated, "Crises like these hit the tourism and hospitality sector first and take the longest to recover because they are not essential needs.
“In the past 15 days, luxury hotels in Bangladesh have lost approximately Tk 1,500 crore, excluding VAT, SD, and other taxes. Our two five-star hotels and one restaurant currently have no guests, and the occupancy rate has plummeted to just 20 percent. We've even had to stop serving the buffet due to the lack of guests."
Govt should step in
ShakawathHossain, also the co-chairman of the Bangladesh International Hotel Association (BIHA) Standing Committee for Planning and Development, remarked, "We [Unique Hotel and Resorts] have faced approximately Tk 20 crore in losses over the past 15 days. Guests are also cancelling their reservations for July and August. Coupled with that, we have lost a significant amount of revenue from corporate events such as business meetings, seminars, and workshops."
Highlighting the sector as a recreational industry, Shakawath added, "The government should step in to protect this sector. Similar to the support given to the ready-made garments industry, the state could provide us with incentives, payment rationing, and help build a positive image to aid in the sector's recovery."
The state-owned Pan Pacific Sonargaon Dhaka is also facing low hotel occupancy. However, they have their layover guests stacked due to the rescheduling or cancellation of flights.
Pan Pacific SonargaonPublic Relations Manager Mohammed Nafeuzzaman told The Business Post, “Due to our prime location, we host several events here, especially business meetings, seminars, symposiums, conferences, weddings, etc. All of which have been mostly cancelled due to the current circumstances.
"However, we did have guests due to the flight cancellations, which allowed us to accommodate layover passengers. However, many foreign guests could not come, leading to a wave of booking cancellations,” he remarked.
“Consequently, our hotel occupancy rate dropped by an average of 30 to 40 percent," Nafeuzzamanexplained. "We remain hopeful that those who cancelled or rescheduled their events will return. We aim to revive the sector within a month."
According to BIHA, representing more than 51 International hotels in Bangladesh, the average occupancy rates in international star-rated hotels have declined to 10 per cent, a steep drop from the usual 60 percentage typically observed during regular business periods.
Strong political will
BIHA President Hakim Ali explained, "This time of the year usually sees satisfactory occupancy rates across all luxury hotels. Foreign guests come to tour various destinations in Bangladesh in September and they book their tickets in the last week of July to August.”
He warned, "The ongoing situation is severely damaging our reputation, creating a negative image that is causing us significant harm."
BIHA noted that there are 55 registered luxury hotels in the country while there are around 2,000 luxury hotels without any star ratings.This industry is currently employing approximately one lakh individuals across these establishments, contributing a staggering 4 per cent to the national GDP.
Echoing Shakawath, Hakim Ali noted, “We have yet to fully assess the exact financial impact, but losses are estimated to be no less than Tk 1,000 crore for all registered luxury hotels combined.
He urged the restoration of their brand value and image stating that a strong political landscape can fix the damage of this sector.
