Mustafa Tahseen Arshad, MD, The Peninsula Chittagong says

Guesthouses diluting Chattogram hospitality market

_A Monitor Report16 Jan, 2019 | 2005 Views|-+
Chattogram : New hotels are coming up in addition to the existing hospitality properties in commercial capital Chattogram, but guesthouses are diluting the market.

In the pipeline are Novotel of the Meridian group, another 200-room capacity property of the Pacific Group. Ambrosia and Best Western Alliance are going for smaller properties- all in purpose-built buildings, not converting a regular tower into a hotel.

“Everything has been done. They are just waiting for clearance and approval of other requirements,” Mustafa Tahseen Arshad, MD, The Peninsula Chittagong, said.

But he painted a sad picture while talking to The Bangladesh Monitor about present condition of hospitality trade in Chattogram. He put the blame on guesthouses, illegally operating across the port city.

He said UNWTO predicts there would not be enough rooms for guests in the port city by 2030. The real picture is different.

“Tourists come. They do not come to the hotels. They go to other places - the guesthouses- instead,” said the MD.

Giving an example, the IT expert turned hotelier said, “Say a Chittagonian speaks good Chinese (language). He would rent a building, open a guesthouse and attract Chinese guests with low rates.”

The guesthouses are being run without any licence, in lanes and by lanes of the port city. It is an open secret, he said.

The Peninsula Managing Director said, “He had moved to different quarters, but the authorities have been unable to curb their growth. Had these guests stayed in hotels, the revenue would have come to us and the govt. also could have gotten a part of it.”

Financial pressure

Mustafa Tahseen Arshad said people talk about encouraging tourism. On the other hand policymakers are continuing to put financial pressure on organisations involved in travel, tourism and hospitality business.

The authorities have increased taxes to such an extent that average amount of taxes paid would be about 87 per cent or more. On imported goods, it would come to over 500 per cent. New "burdens" are being imposed when we go for imports, he said.

“Then there is supplementary duty (SD). We are unable to make money, when we sell rooms, meals or anything. The cost of everything shoots up. Those who are doing business legally, following rules and regulations, are in trouble,” he mentioned

This results in uneven competition. Added to this is the fact that some hotels in the port city are trying to take others' business by undercutting rates. As a result everyone is suffering.

Taxes drive up rates

Mustafa Tahseen Arshad said, “Everything does not have to be taxed. The taxes are driving up our rates. When guests come and see our (professionally-run hotels') rates, they go back.”

Giving the instance of neighbouring India, he said, “Taxes on tourism-related sectors are very low. Travellers can find cheap guestrooms in Thailand as the government there is helping the hotels. This brings their operating costs down.”

Besides, not all departments work together in Bangladesh. Too much paperwork is required. “We had gone to the Department of Environment - they said we reportedly require submitting 20 types of certificates,” he added.

“Why do we need to do BSTI (Bangladesh Standards and Testing Institution) while importing quality pens and slippers for use by hotel guests?” Mustafa Tahseen Arshad posed the question.

He wondered as to why so many papers have to be submitted in his digital age. This is not just once, but it has to be done time and again - whether it is for fresh applications or renewals.

Mustafa Tahseen Arshad said, “If I have to set up a department just to submit papers, then it's a waste of time, money and human resources.”

Foreign exchange

He said unlike readymade garments, all the foreign exchange hotels, travel agents and tour operators earn stays in Bangladesh. They (RMG sector) get incentives while travel and tourism sector does not.

He said when a guest comes; s/he not only spends his or her money at the hotels but also at restaurants, transports and handicraft shops.

But our policymakers do not seem to understand this. We do not get incentives, which are extended to garment factory owners, despite earning foreign exchange for the country, he lamented.

New hotel

The group is going for its second property The Peninsula Airport Garden. Besides 200 guest rooms, it will boast of an Olympic-size swimming pool, three pillar-less banquet halls for grand events, five restaurants.

Mustafa Tahseen Arshad said, “The new hotel will be a "green" one. The windows of the guest room will be big to take advantage of natural sunlight. We will harvest rain water. Wind power will be used to bring down the operation costs.”

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