The once-thriving tourism and hospitality sector is now on the brink of catastrophe with expected losses to be around $470 million in 2020 alone
The “Introduction to the tourism industry in Bangladesh” report by the Royal Danish Embassy in Dhaka in the year 2008 stated that “Generally the facilities and services offered by these accommodations are at a basic level.” Here, the report was talking about the state of the accommodation options or hotels and resorts in the major tourist locations of Bangladesh such as Cox’s Bazar, Rangamati, Sylhet,Chittagong and Dhaka. Fast forward 12 years to 2020 and the “accommodation” landscape in those same places are vastly different, modern and, not to mention, luxurious — made possible due to the evolution of the tourist sector of Bangladesh and the development of local tourism real estate.
In contrast to a decade or so ago, the number of “star-rated” hotels and luxurious resorts have significantly increased to accommodate the growing tourism sector of the country. The industry, which contributed to about 1.5% to the GDP back in 2007, contributed around 4.4% in 2018 and has become a major player in the economy in recent times. The number of both local and international tourists has significantly increased, as has the number of expatriates moving to Bangladesh due to several international NGO’s bolstering their activities. So, to keep pace with growing demand, tourism real estate also had to flourish. Going from having a handful of noteworthy hotels for tourists to 17 five-star hotels — with plans for more in the works.
However, as we know, the world seemed to had come to a stop when the Covid-19 pandemic began to spread, halting inbound, outbound and even local tourist movement everywhere. The once-thriving tourism and hospitality sector of Bangladesh is now on the brink of catastrophe with expected losses to be around $470 million in 2020 alone, as per the World Tourism Organization. The lockdown period boded very badly for tourism real estate. Since, 2016, over $1 billion has been invested in the tourism real estate of Bangladesh by international hospitality giants such as the Marriott International and the Hilton Hotel chains to construct a number of five-star hotels in Dhaka, Chittagong, and Cox’s Bazar.There were also significantly more hotel projects, of all shapes and sizes, on the way too, before the pandemic hit — almost all of which is now at a halt.
Construction of over a dozen hotels have now been delayed by a year or two, and a number of plans are now in a state of flux. According to industry insiders, there were plans for about 17 more star-rated hotels, worth about Tk6,000 crore, which were to be completed by 2025. While a number of them will be concentrated around Dhaka, Chittagong or Cox’s Bazar, some will be in more underutilized places such as Gazipur, Mymensingh and Khulna.Construction of such projects has a major positive effect on tourism real estate as well as on the value of the surrounding real estate landscape. But the sudden stop of momentum for the development of tourism real estate is alarming. The hope is now that the reopening of tourist spots will help regain lost momentum.
Aside from the fact that reopening tourism in Bangladesh will restart the stalled economy of those tourist areas, overall, the real estate sector will also benefit from the decision. Tourism real estate, in particular, may even breathe a sigh of relief once tourists return to those facilities. In April, the occupancy rates across luxury hotels dropped to an average of 30% in contrast to the usual 80%, which severely restricted any plans for further expansion or initiation of new projects. But as people return, an adjusted forecast can be made and, at least to some extent, tourism real estate will see an increase in demand. The stalled hotel projects may move forward with their plans as travel restrictions are eased bit by bit.
Furthermore, if income from tourism starts properly flowing again, the people who depend on that income will be able to return to their normal lives. Almost everyone working in the hospitality industry has been struggling to make ends meet. The rental scene of those areas, in particular, have been suffering the most as people keep failing to pay rent on time. But once tourism economy restarts, the rental situation can hope to return to its former level. And the same goes for the local residential scenes as well.
Overall, both the hospitality industry and the real estate industry have been suffering a lot due to the pandemic and the subsequent lockdown. A number of plans and projects were stalled and are yet to resume. However, as the government takes the decision to reopen major tourist spots one by one, the light at the end of the tunnel can be seen when tourism and tourism real estate can begin to rebuild all that they have lost.
This article is part of a paid partnership with bproperty