Luxury hotels hit by import challenges

Luxury hotels in Bangladesh are struggling to ensure the quality of services to their foreign and other important guests owing to a dearth of import-dependent supplies, such as food ingredients, alcoholic beverages, and room amenities. The problem has arisen as a result of bureaucratic complications, government restrictions, and a dollar crunch.

Infograph: TBS

For instance, it takes hoteliers at least six months to over a year to obtain foreign-brand liquors, as this process requires permission from multiple authorities.

Industry insiders attribute this issue as one of the reasons for the low turnout of leisure inbound tourists in Bangladesh, as approximately 70% of their guests are foreigners, primarily business travellers.

The hotels use around 1,000-1,200 types of products related to their services, with around 50%-60% of these products being import-dependent, according to the Bangladesh International Hotel Association.     

There are 46 star hotels registered with the tourism ministry, most of which depend on third-party suppliers and importers for their regular necessities.

Suppliers have also faced difficulties in providing the hotels with their essential items in recent months as the opening of letters of credit (LCs) has become more challenging.

Golden Tulip - The Grandmark, a 4-star hotel located in Banani in the capital, uses approximately 165 ingredients for its food and beverage items. Only 11 of these, accounting for 7%, are locally sourced, while the remainder are imported products.

"It is so complicated and time-consuming that we don't dare to import food products or other products ourselves. Opening LCs, getting BSTI seals, and above all, high costs—we buy from third parties instead of importing ourselves," Khaled Ur Rahman, managing director of the hotel, told The Business Standard.

According to alcohol control rules, hotels can procure 40% of their total alcohol consumption from the Parjatan Corporation's duty-free shop or through imports, while the remaining 60% must come from domestically produced sources, with duties and taxes paid at prevailing rates.

However, most of the hotels collect liquor from the Parjatan Corporation, as it is comparatively easier for them than to self-import.

However, they need prior approval from the Department of Narcotics Control and Customs Bond Commissionerate, which is a lengthy process spanning at least six months. 

A four-star category hotel based in Chattogram had applied for a consignment of liquor from the corporation in May last year and received it in June this year, according to hotel officials.

Razib Mina, divisional deputy director at the Department of Narcotics Control, Dhaka, told TBS, "A hotel's application for foreign liquor is investigated in multiple stages. From the district level of the department, it comes to our divisional level. From the division, we send it to the head office within a maximum of three days. So there is no delay at our level."

"Investigation is done on the basis of a checklist where all relevant documents are verified. If there is a delay in getting approval for a hotel, then they might have missed something," said another official at the department.

The director of a star hotel based in the tourism city of Cox's Bazar told TBS that the management of the hotel had to wait more than a year to get a final response from the authority.

"A long time having gone by after I applied, the Parjatan Corporation informed me that the desired brand is no longer available as per demand. Later, I had to pay more than the price I had applied for the liquor. In this, the corporation charged an additional amount on the pretext of an increase in taxes," he told TBS.

Mohammad Shafiuzzaman Bhuiyan, general manager (duty-free operation) at Parjatan Corporation, told TBS, "There is no delay at our level. Once the narcotics control department and Customs Bond Commissionerate approve, we hand over the liquor to hotels within a week, subject to availability in the warehouse."

Tourism corporation sources said that the National Board of Revenue (NBR) usually approves imports for an amount lower than the requested quantity every year. Consequently, the corporation cannot meet demand adequately.

In fiscal 2021-22, the Parjatan Corporation imported liquor and beer worth $700,000, compared to $1.1 million in the previous year.

How the dollar crunch takes a toll on the hospitality sector 

Due to the difficulties in opening LCs, importers are unable to supply the expected quantity of products to the hospitality sector.

Md Parvez Bhuiyan, proprietor of Allion Trade International, said, "I supply a variety of items, like milk, sauces, and oil to hotels. Currently, the government keeps changing taxes frequently and restricts the import of luxury goods. I used to be able to open 6-7 LCs every month, but now it takes two to three months to open an LC."

"We are not able to provide products to the hotels as per demand because we are not able to import," he added.

A 5-star hotel manager said that recently a new problem has arisen regarding perishable products. A lot of imported fruits that do not have an available source are used.

Md Anwar Hossain, vice president, Bangladesh Foodstuff Importers and Suppliers Association, told TBS," "We can't open LCs because of the worsening dollar crisis."

Hakim Ali, president of the Bangladesh International Hotel Association, told TBS, "If we want to develop the tourism industry, we can follow the policy of our neighbouring countries."

Regarding the importation of liquor, he said, "We have been writing letters to the ministry and the narcotics department regarding this for a long time. But we are not getting any improvement."

Hoteliers dissatisfied with local meat  

Hoteliers are suffering from poor quality meat as the government has stopped the import of frozen meat, especially buffalo meat, from India to protect local cattle farmers and help domestic livestock.

According to the import policy, prior approval has to be obtained from the Department of Livestock Services for the import of meat, including frozen buffalo (bovine) meat.

"Due to government restrictions, the import of Australian beef has been halted, leading to an increase in the price of local beef," said the manager of a 5-star hotel in Gulshan.

"For these reasons, foreign tourists may perceive Bangladesh as an unattractive destination," he said, adding, "we lack many of these interesting items, and high product prices also play a role. Ultimately, it's a matter of reputation."

Stating that local food such as meat is not enough to maintain the desired quality of star hotels, Shahid Hamid, executive director, Dhaka Regency Hotel and Resort, a five-star establishment, told TBS, "Since the government is not allowing the import of meat, we are trying to run with locally available food."