Can hotel businesses pull through the pandemic?

Over the last decade, the tourism industry has been growing in Bangladesh at a steady rate as the number of arrivals had reached 323,000 (an all-time high), right before the pandemic. 

With the whole world suddenly coming to a halt, one of the most affected has been the hotel businesses. With countrywide lockdowns throughout the past one and a half years, and the cancellation of domestic and international flights to and from Bangladesh have resulted in huge losses in the entire tourism industry.

According to Tour Operator Association Bangladesh (TOAB), the entire tourism sector of the country might suffer a loss of around Tk 5,700 crore this year due to the decrease in mobility of people--putting around four million people who are employed in this sector at great risk.  

“We are trying our best to not reduce the number of employees and we have been quite successful till now, however as the service charge plays a huge role in this sector, the sharp decline of it has made many quit their jobs,” said Sabrina Mridha, Senior Manager Marketing and Communications at Amari Dhaka.

Before the country went into lockdown earlier this year, the first quarter showed a less than 50% booking among all the major branded hotels around the country. The occupancy rate of hotel Amari Dhaka sank to just 10% while La Meridian Dhaka dropped to less than 60% from the usual 90-95% during the first quarter alone.

Most hotels during the lockdown have fallen back on their restaurants for generating revenues, as takeaways have continued throughout. However, according to industry insiders--the response has come down significantly during the last lockdown in comparison to the previous ones.

The members of the Bangladesh International Hotel Association (BIHA) have urged the government to reduce VAT (Value added tax) to help hotel owners survive the crippling situation they find themselves in. But according to insiders, no real change has been made yet to help ease the burden.

“It has been more than a week now that the government has lifted the lockdown but the occupancy rates still remain the same, with hardly 5 or 6 rooms being booked a day,” said Ataur Rahman, Senior Executive at Grace 21.  It is a three-star boutique hotel situated near the airport.

“We are trying our best to improve the situation with lucrative offers and packages and now only time will tell if those actually work or not,” he added.

During the early phases of the Coronavirus outbreak, returnees from other countries were compelled to quarantine for 14 days before they were allowed to go back to their homes. At least 40 hotels were accommodating these returnees. This kept many hotel rooms occupied and helped with the dire situation. Now as international flights have been cancelled for a while, hotel businesses are back to suffering huge losses.

On the other hand, the economy of Cox’s Bazar-- which is known as the tourist capital of the country is largely dependent on tourism. According to the Tour Operator Association of Bangladesh (TOAB), the district is likely to face a loss of Tk 20 billion in revenue. As aviation, tourism, hospitality and transportation industries are all interlinked to each other. However, the hotels and resorts are doing relatively better now than the ones located in the capital, ever since the lockdown has been lifted.

“People are impatient to start travelling again and it shows,” said a manager of a hotel situated in Cox’s Bazar--unwilling to reveal his identity. According to him, in the last 8 days, there has been an increase in bookings which is a positive sign. 

However, the authorities fear that lockdowns can now be imposed at any moment which will throw many such hotels out of business for good.