Star Rated Hotel Industry Faces Financial Crisis Due to Decline in Tourists and Guests

Loss of 1,500 Crores in Three Months
BIHA President Hakim Ali Calls for Policy Support from the Government

Country’s luxury hotels, including three, four, and five-star categories, are suffering from a lack of VIP guests and tourists. While inflation has driven up operating costs, revenues in the sector have not increased proportionally, putting entrepreneurs and investors under pressure. On one hand, they are required to pay high-interest rates on bank loans, and on the other, even though their income has decreased, hotel management must pay employee wages, allowances, and utility bills on time. As a result, the financial crisis in this sector is intensifying, according to industry leaders.

In particular, star-rated hotels in cities like Dhaka, Chattogram, Cox’s Bazar, and other divisional cities have yet to return to their normal operations. The instability in recent months has led to a significant drop in the number of tourists, guests, corporate organizations, and large social events, causing a sharp decline in the revenue of these luxury hotels. This, in turn, is increasing the risk of a rapid financial crisis in the sector, which experts fear may have broader negative implications for the country’s overall economy.

H.M Hakim Ali, President, Bangladesh International Hotel Association (BIHA)

Bangladesh International Hotel Association (BIHA) recently expressed concerns, stating that star-rated hotels have faced tough times during July, August, and September due to the situation. Both domestic and international tourists were hesitant to visit Bangladesh during this period. Although conditions have somewhat improved, these hotels are still struggling with a scarcity of tourists and guests. BIHA reports that occupancy rates at star-rated hotels have dropped to 20-30%, compared to the usual 70-80%. As a result, the hotels are unable to generate sufficient income to sustain their operations. Additionally, travel bans imposed by some foreign countries have not yet been lifted, further exacerbating the financial strain on the industry.

According to the Ministry of Civil Aviation and Tourism, Bangladesh currently has 51 registered star-rated hotels, alongside approximately 2,000 more hotels that operate without official ratings. This industry represents investments worth thousands of crores of taka and provides direct employment to over 100,000 people, with another 500,000-600,000 people indirectly depending on it. Additionally, the sector contributes around 4% to the country’s GDP.

BIHA reports that due to the changing situation, the financial losses of registered star-rated hotels have exceeded 1,500 crores. Regarding this, BIHA President Hakim Ali said that this time of year usually sees high occupancy rates at luxury hotels, with foreign tourists visiting popular tourist destinations across the country. However, this year’s scenario is completely different. Luxury hotels are not getting the expected number of tourists and guests. As a result, entrepreneurs in the industry are under pressure due to decreased revenue, and their loan and interest burdens are increasing.

He emphasized the need for government policy support to overcome this crisis, particularly in the form of flexible loan terms, waivers of utility bills, and financial incentives. He expressed hope that the current caretaker government would take swift action to support this promising sector.

Shakhawat Hossain, Co Chairman of BIHA’s Standing Committee on Planning and Development, mentioned that many guests have cancelled their bookings, exacerbating the problem. He said, “We have lost a significant amount of revenue from corporate events, including business meetings, seminars, and workshops.” He stressed the need for government intervention, comparing the situation to that of the garment industry, which receives incentives and extended payment periods. This sector could benefit from efforts to rebrand Bangladesh as a safe and attractive destination.

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