Luxury hotels face declining profits in Oct-Dec despite peak season

Infographic: TBS

Despite being in peak season, the profits of four luxury hotel operators declined or turned into losses during the October–December quarter of the current fiscal year, largely due to nationwide political unrest and economic uncertainty during the period.

Two luxury hotels, Sea Pearl Beach Resort and Peninsula Chittagong, reported losses, while Best Holdings saw a sharp decline in profits. Unique Hotel, however, managed to remain profitable despite the challenging conditions.

Hotel operators noted that the sluggish business began with the fiscal year, fueled by student protests and an unstable economy. 

Inflation and rising utility costs further compounded the industry's struggles, leading many travelers to adjust their plans amid the ongoing instability.

Even with significant discounts, many hotels struggled to attract guests, they said.

Peninsula Ctg

In the quarter, Peninsula Chittagong reported a significant increase in its loss, rising from Tk8 lakh to Tk97 lakh compared to the same period last year. 

Its revenue reached Tk10.85 crore, up from Tk9.73 crore in the previous year. 

However, the company attributed the decline in EPS to various financial pressures. Sales dropped by 15.86%, resulting in a 45.68% decrease in gross profit. Additionally, financial costs rose by 16.92%, and income tax expenses surged by 128%. 

The hotel sector also faced escalating utility rates and higher commodity prices, contributing to an increase in the cost of goods sold, the company said. 

Rising interest rates further inflated financial costs, while LC processing fees and the devaluation of the taka against the US dollar added to the financial strain. 

Despite the fall in EPS, the company's net operating cash flow per share (NOCFPS) showed improvement.

Sea Pearl

According to the unaudited financial statement of Sea Pearl Beach Resort for the October–December quarter, The Royal Tulip hotel incurred a loss of Tk3.08 crore, which was 74% lower than the Tk11.69 crore loss in the same period of the previous fiscal year.

However, its revenue dropped significantly, declining by 52% to Tk23 crore in the period from Tk48 crore in the same period of the previous fiscal.

Best Holdings

Best Holdings also reported a sharp decline in profit during the quarter. Its profit after tax dropped by 71%, falling to Tk11 crore from Tk38 crore in the previous year.

The company's revenue stood at Tk63 crore in the October–December quarter, compared to Tk89 crore in the same period of the previous year.

The company disclosed that political instability in the country has negatively impacted the tourism industry, leading to an unexpected decline in revenue.

Unique Hotel

According to the unaudited financial statement of Unique Hotel and Resort for the October–December quarter, its hotel in Dhaka The Westin Dhaka reported a net profit of Tk33 crore, significantly higher than the Tk15 crore profit in the same period of the previous year.

In this quarter, its revenue stood at Tk76 crore, up from Tk70 crore a year ago.

The company said the student movement in July–August this year, along with its aftermath, led to widespread unrest and heightened security concerns, severely impacting the tourism and travel sector. 

"In response, several countries issued travel advisories and restrictions, which negatively affected international hotel bookings. Many travellers chose to postpone or cancel their trips, while corporate event bookings were also cancelled due to security concerns," the company said.

Additionally, Bangladesh experienced a devastating flood in the first quarter, lasting several weeks, which further discouraged travel and added to the industry's challenges, according to the company's statement.