• Thursday, Jul 07, 2022
  • Last Update : 04:24 pm

Hospitality industry pleads for bailouts as losses pile up

  • Published at 08:18 pm August 30th, 2021
A view of the hills from Sairu Hill Resort in Bandarban, Chittagong Collected

In a recent letter to Prime Minister Sheikh Hasina, BIHA sought her personal intervention in bailing the industry out and also asked for two-year-long soft loans to overcome losses

The government needs to bail out the hospitality industry which has incurred heavy losses amid the pandemic, President of the Bangladesh International Hotel Association (BIHA) Hakim Ali told Dhaka Tribune recently.

“The hospitality and aviation sectors will continue to suffer in the next five years unless the world can eliminate this deadly disease,” added Ali, who is also the managing director of Hotel Agrabad in Chittagong. 

In a recent letter to Prime Minister Sheikh Hasina, BIHA sought her personal intervention in bailing the industry out and also asked for two-year-long soft loans to overcome losses.

Financial institutions and banks have already invested about Tk60,000 crore in the country’s service sector, such as hotels, motels, restaurants, cottages, hospitals, travel and tourism, and aviation in recent years, the association added in the letter.

It also sought the intervention of the prime minister in giving a one-year interest waiver to the sector.

Also Read - Tour operators seek incentive package for recovery

Industry leaders have also sought an exemption of holding taxes for residential hotels and resorts under city corporations and municipalities till FY21. 

Furthermore, they have asked for exemption of tax deduction from the salaries of officers and employees of residential hotels and resorts.

SM Zillur Rahman, head of the World Association for SMEs who runs some restaurants in Dhaka, said the restaurant business has been dull during the last one and a half years, with several hundred employees having either lost their jobs or not been paid properly.   

He said that several thousand small and medium restaurants are also incurring heavy losses with no signs of improvement.

According to the Pacific Asia Travel Association (PATA), more than 310,000 hotel workers and employees in Bangladesh are at risk of becoming unemployed due to the pandemic.

Though reliable statistics are unavailable in Bangladesh, Covid-19 caused losses to the tune of some Tk7,000 crore to the sector last year, and if this situation continues, the loss of hotels in Bangladesh may exceed Tk20,000 crore by the end of this year, according to industry insiders.

“The government should recognize the tourism and hospitality sectors as an industry that generates several million jobs and exports skilled talent overseas,” said Azeem Shah, former general manager of Renaissance Dhaka.

“To become a tourism hub, we need to have good infrastructure in terms of world-class facilities like transport, roads, and tourist-oriented law and order facilities,” he added.

And the tourism industry is also important in the implementation of Vision 2021 and Vision 2041 of Prime Minister Sheikh Hasina.

It also involves the country’s image, international relations and the national economy, a BIHA leader said.

Recently, the parent company of The Westin Dhaka, Unique Hotel and Resorts Limited (UHRL), asked the government to bail it out as its business has been severely impacted by the ongoing coronavirus pandemic.

Md Noor Ali, managing director of UHRL, recently wrote to Finance Minister AHM Mustafa Kamal, seeking his intervention to help Westin survive.

Revenues of UHRL declined to Tk50 crore or 61% until March of FY21 against Tk157.7 crore made in the corresponding period of the previous fiscal year. 

The Bangladesh Bank on July 15 declared a new Tk1,000 crore stimulus package for hotel, motel and theme parks suffering from the ongoing business slowdown amid the pandemic.

The owners of residential hotels and theme parks are entitled to receive easy funds, primarily to be used as working capital, with only 4% interest.

“The hospitality industry will not be able to bounce back from such difficulties unless airline movement returns to normal,” said Akhtaruzzman Khan Kabir, CEO of Bangladesh Tourism Board.

It is unfortunate that the circular of Tk1,000 crore incentive loan is yet to reach the branches of various public and private banks, he further said.

Kabir estimates that the industry has incurred a loss of Tk20,000 crore because of the pandemic.

"How can this sector, battered by the ongoing pandemic, survive without incentives and soft loans?” Kabir questioned.

“We will be able to reinstate the jobs of 900, 000 employees if we get some loans,” he said. 

A total of 2.3 million people are employed by the hospitality industry across the country, he added.

“International standard hotels are still running below the breakeven point and more guests are needed,” Kabir also said.

Meanwhile, highlighting the importance of the tourism industry in the country’s economy, Khaled-ur-Rahaman Sany, co-chairman of BIHA Disaster Management Committee, said that the sector’s contribution to the GDP is 4.4%. 

The sector has prospects of attaining double-digit growth, he added.

Association of Travel Agents of Bangladesh (ATAB) past president SN Manzur Murshed said that the way the government approached incentives for the garment sector and remittances, the same approach needs to be applied for the aviation and tourism sectors.

Also Read - Tour operators on the brink of collapse

Last year, the government announced various stimulus packages involving Tk95,619 crore, which is 3.3% of the GDP, to offset the possible adverse impact on the economy due to the nationwide shutdown declared for the coronavirus pandemic.

The aviation and tourism sectors were included in the financial stimulus packages. 

The government also formed a 14-member tourism crisis management committee headed by the Bangladesh Tourism Board (BTB) CEO to find the kind of incentives the tourism stakeholders need to tackle the crisis.

The global tourism industry has been devastated by the coronavirus pandemic, with $320 billion lost in exports in the first five months of the year and more than 120 million jobs at risk, UN Secretary-General Antonio Guterres said recently.

In a policy briefing and video address on August 25, he said international tourist arrivals decreased by more than half because of the global health crisis, which has crippled the world's economies.

Tourism is the third-largest export sector of the global economy, behind fuel and chemical, and it employs one in every 10 people worldwide, Guterres further said, adding that in 2019, it accounted for 7% of the global trade.

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