Hotel projects put on ice

Bangladesh could see more star hotels in the next five years than what it has seen in the last five decades. But the Covid-19 pandemic has made all that uncertain.

Now, many of the upcoming hotel projects would be delayed by a year or more due to the ongoing coronavirus onslaught – a development that will also have a negative effect on the entrepreneurs' bearing loan instalments.

It is estimated that the launch of nearly one and a half dozen hotels that are now under construction will be delayed by one or two years. Most of the hotels have stopped work amid the pandemic.

Even though works have restarted in some projects after the end of the shutdown that lasted more than two months, a lack of funds and uncertainty about businesses remain a big worry for the investors.

At least two hotels that were supposed to open at the end of March could not do so because of the coronavirus crisis. Four months into the Covid-19 pandemic, they are still not sure about when they will be able to go into operation – each of which was built at the expense of Tk400 crore-Tk500 crore.

Unique Hotel and Resorts Limited had a plan to launch a 5-star Sheraton Hotel in the capital's Banani by March 2020. But the pandemic hit the company so hard that it has not been able to stick to their plan.

The company also plans to launch the 7-star St Regis Hotel and the 5-star Hyatt Centric Dhaka Hotel in Gulshan by 2025.

Shakhawat Hossain, chief executive officer of Unique Hotel and Resorts, said, "All of our hotels were under construction. Work now remains suspended due to Covid-19."

Best Western Hotels and Resorts, a US-based global chain, was about to launch its franchise Maya Corporation in the name of the "Best Western PLUS Maya" at Nikunja in the city.

Work on the hotel started three years back and it was scheduled to start operating within March this year. But they had to suspend its launch.

It is the only 4.5-star standard boutique hotel with 42 rooms and its services and facilities are similar to what a 5-star hotel offers, said Rashadhul Hossain Chowdhury Ronni, chief executive officer of Best Western PLUS Maya.

"The hotel was built with a 90% bank loan. Around 45 employees were appointed. But all plans have been upset amid the pandemic. Now we have only seven employees. We have laid off the others," he added.

He said they were uncertain about the opening of the hotel in the current situation.

Around 17 star hotels, of which 13 are 5-star ones, involving around Tk6,000 crore in investments, had plans to hit the market within 2025, according to industry insiders.    

These hotels will have more than 3,000 rooms creating a minimum of 6,000 job openings.

A star category hotel recruits 1.7 to 1.8 employees against a room. The interior design of a room in a star category hotel costs minimum Tk30 lakh. On average, a five-star hotel with 250 rooms costs more or less Tk500 crore to build, said Md Al Amin, general manager at Six Seasons Hotel in Gulshan.

"Covid-19 has messed up everything  and created uncertainty over the timely launch of upcoming hotels," he added.

The international hotel chains which are expanding business in Bangladesh include Hotel Sheraton, Holiday Inn, JW Marriott, Swissotel, Hyatt Regency, Element Hotel, Saint Regis Hotel, Hilton Hotel, and Dusit Hotel.

Local entrepreneurs usually build luxury hotels while international hotel chains operate them under a profit-sharing arrangement.

More than half of the building cost of the hotels, around 60-70%, are borne with bank loans and the remaining part comes from their equities, industry players said.

Premier Hotel Management Company Ltd, has signed an agreement with Global hotel chain Hilton Worldwide Holdings Inc. to manage Hilton Dhaka at Gulshan with 250 rooms by 2022.

The company also launched the Renaissance Dhaka Gulshan Hotel which is a chain of Marriott international with 211 rooms.

An official of the Hotel Renaissance said, "We started our hotel's operation on December 18 last year. Unfortunately, the pandemic hit hard the sector."

Bengal Hotels & Resorts Limited, a sister concern of Bengal Group of Industries, and Swissotel Hotels & Resorts have signed a deal to build the Swissotel Dhaka at Gulshan-Tejgaon Link Road in the capital with a capacity of 375 rooms.

Bengal Group's Vice-chairman Md Jashim Uddin said their hotel is scheduled to be opened in 2022, but it may be delayed due to the impact of the pandemic.

InterContinental Hotel Group plans to soft launch Holiday Inn Dhaka with its local partner Marium group in March 2020, but it failed to do that. It is located at Tejgaon near Hatirjheel.

When contacted Daniel Ludwig, the general manager of the hotel, declined to comment on the issue.

Holiday Inn was set to go and had appointed the required staff. Now the hotel has laid off employees as they could not go into operation.

Best Holding Limited has started working with Marriott International for launching two new hotels in Mauna of Gazipur and Bhaluka of Mymensingh.

Amin Ahmad, chairman of Best Holdings Limited, said, "We have continued the construction of Marriott Courtyard at Mauna, Gazipur. Work on another hotel in Mymensingh is now going on at a slow pace."

Other upcoming hotels

Amari hotel has plans to launch another business named Hotel Ozo in Gulshan by 2022.

Sabrina Mridha, senior manager (marketing) at Amari Hotel said, "We cannot say anything about the running of the hotel at this moment due to Covid-19."

Radisson Hotel Group and Grand Hotel and Hospitality Limited had jointly planned to set up a new luxury hotel in Khulna that features 150 rooms.

Radisson Hotel Khulna will be a brand new upscale hotel close to the heart of the second-tier port city which is scheduled to open in the third quarter of 2023.    

Union Limited has signed a deal with Hyatt Hotels Corporation to lunch a five-star hotel in the capital. It will be located near the Bashundhara residential area entrance on the 300-feet road.

Howard Johnson Hotel, a Wyndham Hotel Group brand, has planned to launch by 2022 in Dhaka. The hotel will be located in the Mohakhali area in the capital. It is under construction now.

Some other hotels planning to come in Chattogram are Courtyard Marriott, Peninsula Airport Garden and Novotel.

According to the Bangladesh Bureau of Statistics (BBS), the hotel and restaurant sector posted a 7.28% growth in the fiscal year 2018-19. The figure was 7.13% in the previous fiscal year.

The business size of the sector was Tk7,300 crore in the fiscal year 2018-19, according to BBS.

According to the civil aviation and tourism ministry's hotel and restaurant cell, the country has 17 five-star, four 4-star and 17 three-star hotels.