Battered by pandemic, luxury hotel projects in distress

Holiday Inn Dhaka, a newly constructed four-star hotel at Tejgaon near Hatirjheel in the city, was all set to start welcoming guests from March 2020, but the Covid-19 pandemic rained on the parade.

One and a half years later, only the gymnasium of the 200-room hospitality property is being used by its managing director and his son for their morning exercise while all the staffers, except for a few engaged in maintenance and security, have been laid off in the meantime.

Like Holiday Inn, at least 17 star-category hotels – including 13 five-star ones – that involve Tk6,000 crore investment and were slated for launch within 2025 have had to shelve their plans for now because of Covid disruptions, according to industry insiders.

Sheraton Hotel in Banani was also supposed to open at the end of March last year but could not do so because of the slump caused by the pandemic.

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

These new hotels will have more than 3,000 rooms and are expected to create at least 6,000 jobs.

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

Around 60%-70% of the building costs of such hotels are met with bank loans and the rest come from their equities, industry players said.

A star category hotel recruits 1.7 to 1.8 employees against a room as per the service standard of Bangladesh and South Asia recommended by expert hospitality professionals.

They added that the interior design of a room in a star category hotel costs a minimum Tk30 lakh. On average, around Tk500 crore is needed to build a five-star hotel with 250 rooms.

Mentioning that the novel coronavirus halted the progress of the ongoing projects, industry insiders said even though the pandemic situation has improved now, construction work is yet to pick up the pace. Entrepreneurs are still not sure when they will be able to make their hotels operational as it remains uncertain as to when the overall economy will fully recover from the Covid shocks.

Many of the upcoming hotel projects have already been delayed by a year or more as most of them had stopped work amid the pandemic – a development that  also had a negative impact on the entrepreneurs' ability to bear loan instalments, they continued.

"Covid-19 has messed up everything and created uncertainty over the timely launch of upcoming hotels," said Md Alamin of The Westin Dhaka.

Even though the businesses of the star hotels already in operation have been showing signs of recovery, he said it will take at least up to the second quarter of 2022 for the business to return to half the pre-pandemic level.

Tk1,600 crore investment in three projects

Unique Hotel and Resorts Limited (UHRL) has invested around Tk1,600 crore for building three hotels in Dhaka – Sheraton Dhaka Hotel, Hotel Hyatt Centric, and St Regis Hotel.

Of the amount, Tk457 crore has been invested in Sheraton Hotel, Tk533 crore in Hotel Hyatt, and Tk621 crore in St Regis Hotel.

"The name of 5-star Hyatt Centric Dhaka Hotel has changed as it would be operated as Westin Residence. All civil engineering work on the hotel has already been completed," said a chief financial official of UHRL.

The company plans to launch the five-star Westin Residence Dhaka Hotel in Gulshan by 2024 and the seven-star St Regis Hotel by 2025, the UHRL official added.

"Sheraton Hotel in Banani is almost ready to go into operation this month as we have completed the appointment of around 400 employees.

"Besides, St Regis Hotel is in the construction phase although the work pace is slow due to Covid disruptions," he added.

Other projects

One of the world's leading hotel companies, InterContinental Hotel Group, in partnership with local Marium Group had started to build Holiday Inn Dhaka.

Because of the pandemic, the authorities had to cancel their plan to launch the hotel. Even the general manager of the hotel, Daniel Ludwig, had to go back home in September this year, closing his Bangladesh assignment.

Speaking to TBS, its head of sales and marketing Dhiraj Roy, however, said they were planning for a soft lunch by this November. He also mentioned that they were re-hiring the old employees and also recruiting new ones.

Another hotel by international chain Swissotel Hotels and Resorts with a capacity of 375 rooms is under construction on the Gulshan-Tejgaon Link Road in the capital.

Bengal Hotels & Resorts Limited, a sister concern of the Bengal Group of Industries, is the local partner of the Swissotel Dhaka.

Bengal Group Vice-Chairman Md Jashim Uddin earlier told TBS that their hotel was scheduled to open doors for guests in 2022, but the launch may be deferred because of the pandemic.

Amari Dhaka Hotel had plans to launch another hotel, Hotel Ozo in Gulshan, by 2022, but the project has been put on hold due to the pandemic.

"We initially rented a building for the interior decoration of the hotel. However, the project remains halted at this moment as per management decision," said an official of the Amari Hotel, wishing anonymity. He, however, did not clarify the reason behind the decision.

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

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

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

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

The business size of the sector was Tk7,300 crore in FY19, according to the BBS.

According to the civil aviation and tourism ministry's Hotel and Restaurant Cell, the country has 17 five-star, six four-star and 20 three-star hotels.