The Financial Express

The role of hospitality industry

| Updated: October 24, 2017 10:50:47

Lankabangla and Fianancial Express Lankabangla and Fianancial Express
The role of hospitality industry

The decision taken by the Cabinet on April 04, 2016 to evict all commercial entities from the residential areas in Gulshan, Banani, Baridhara, Dhanmandi and Uttara within six months came as a bolt from the blue to the owners and stakeholders of all business establishments, especially the heavily capital-intensive hospitality industry, operating in those areas.
At a press conference held in the city on May 14, the Federation of Hotel, Guesthouse and Restaurant Owners Association of Bangladesh (FHGROAB) gave vent to serious the anxieties of the owners, investors, employees and thousands of others who are directly or indirectly either dependent on or related to those establishments. The FHGROAB expressed its deepest shock, surprise and concern at such an abrupt decision taken at the highest level of the Government without any prior discussion with the stakeholders.
The decision to remove the hotels, guesthouses and restaurants in particular seems to be in sharp contrast with the Government's policy to promote tourism in the country. The Government has declared 2016 as the "Tourism Year". The Ministry of Civil Aviation and Tourism is reportedly working to attract 1.0 million foreign tourists in the year 2016-17. But can just a few 5-star hotels accommodate all these targeted tourists or can all of them be expected to afford the luxury of staying in those expensive 5-star hotels? The obvious answer is "NO". Will the other hotels located outside those residential areas with much inferior quality of service and literally no measure for safety or security be acceptable to the foreign tourists as an alternative place to stay? The answer will also be "NO".
Experience suggests, overwhelming majority of the targeted 1.0 million tourists will prefer to stay in the mid-range boutique hotels located in those few posh residential areas of the city because there they will feel relatively safe, secure and comfortable. Within a walking distance they can find hundreds of high class western and oriental restaurants and enjoy the delicacies of a wide choice of affordable hygienic food in an ambience of elegance. For the same reasons the foreign visitors, numbering not less than 300,000, who usually travel to Bangladesh a year mainly on business, will also prefer to stay in the hotels and guesthouses located in those residential areas. So, removal of these tourist-friendly hospitality establishments reportedly selling over 3000 rooms per day will undoubtedly discourage the majority of the tourists to visit Bangladesh and all plans and actions to brand Bangladesh as a tourist destination is like to flounder. Such a situation may also prompt the business visitors to source their trading partners in other countries. This will be detrimental to our economy and the country's image.
SOCIO-ECONOMIC IMPACTS: Let's look at other socio-economic impacts in the event of dislodging these hospitality establishments. According to a statement of the General Secretary of FHGROAB at the press conference, the hotels, guesthouses and restaurants operating in those residential areas pay about Tk. 4.0 billion as VAT and all utility bills at commercial rate. Billions of Taka has been invested to set up and bring these establishments to an international tourist-friendly standard.  In 28 hospitality establishments in Gulshan alone Tk. 20 billion is learnt to have been invested of which Tk.6.0 billion is bank loan. These establishments have created employment opportunity for more than 100,000 workers, who earn livelihood for a minimum of 1,000,000 people dependent on them. A similar number of people are also linked to these establishments as vendors and outsourced service providers.
What a colossal loss our economy shall be made to incur if these establishments are so abruptly and whimsically done away with! All the investments will go down the drain and a few millions of Taka will be added to the already high NPL (Non-performing Loan).  Not only will the investors and financial institutions suffer, but the country's hospitality industry as a whole will also sustain irredeemable loss.
If the hospitality establishments are forced to wind up and vacate the premises they either developed or rented to run their business, there will be a serious adverse impact on the owners/landlords of those premises. All of a sudden their rental income will evaporate resulting in a grave financial crisis for them. Those who had taken bank loan to construct/develop those buildings may be compelled to become loan defaulter and redemption of their mortgaged properties will be at high risk.
TRAFFIC CONGESTION: Traffic congestion was also cited by some as a reason prompting the Government to take such a hard decision. But, will it be fair to hold the residential hotels, guesthouse and restaurants responsible for traffic congestion? In fact, the decision taken by the competent authorities in early 90s to allow division of plots and construction of highrise apartment buildings led to rapid increase in the number of residential areas. Besides, vehicles of all kinds and speeds cause horrendous traffic congestions in Gulshan and Banani. While a plot of land was allotted for one family, it is now being used to house multiple numbers of families.  Moreover, since the main Gulshan Avenues, Kemal Ataturk Avenue and Road 11 of Banani were allowed for commercial use, a substantial part of the city's commercial hub moved to Gulshan and Banani from its original locations. Many banks and business organisations constructed highrise building complexes and moved their corporate offices over there. Innumerable private businesses also moved their offices to those complexes from other parts of the city. Vehicular traffic increased astronomically. But the number of roads, utility services, civic amenities and other necessary infrastructural facilities were neither designed nor subsequently developed up to a desired level to cope with such unplanned and unforeseen increase of population and vehicular traffic in those areas. Resultantly, like other parts of the city, traffic congestion became a part of undeniable reality of daily life in these areas as well.
So, the question is: why has the government taken such a decision? If the decision was taken to keep the residential areas free from commercial activities, one would find it extremely difficult to agree. The residential areas like Gulshan, Banani, Baridhara and Uttara in particular were developed by RAJUK and erstwhile DIT as "MODEL TOWNS". But the concept or the reality of a model town does not mean just an area to have residential houses alone. The residents of any model town are not just like 'perpendicular biological phenomenon'.  They are human beings and they need a host of basic facilities and amenities that they can easily access and enjoy as a part of their daily life. No residential area can be strictly earmarked for "living" only. Some non-residential activities will have to be there for socialisation, entertainment, rest and recreation of the residents. So, the hospitality establishments, which by no means create any environmental issue, are to be treated as an essentially desirable part of a "Model Town".
SUGGESTION: There is hardly any need to overemphasise that the Government's decision to evict the hospitality establishments in particular from the capital's posh residential areas will result in loss of billions of Taka invested by the stakeholders causing untold miseries for them, render more than 100,000 employees jobless, deprive well over a million of people associated with or dependent on this industry of two square meals a day, cause loss of Government revenue amounting to several billions of Taka, push the banks and financial institutions to bear an unforeseen additional burden of several millions of Taka as NPL (Non-performing Loan), throw the landowners' properties into high risk of liquidation, sharply restrict inflow of foreign tourists and business travellers, cause irreparable damage to our trade and industry, and create other multidimensional socio-economic problems.
If just restoring the residential environment in these "Model Towns" was the main concern for the Government to take such a hard decision, it will be prudent to find better alternatives instead of hitting the country's flourishing hospitality industry so hard and exposing the country to grave socio-economic  consequences. The alternatives may include such steps as (i) ensuring proper use of the underground space for parking of vehicles as per approved plan, (ii) making the use of the existing parking lot at Gulshan-1 mandatory and building more similar or larger parking lots to keep the roads and avenues free from indiscriminate parking of vehicles, (iii) building two new roads with flyovers  parallel to the main Gulshan Avenue over the canals of Gulshan and Banani to link these two densely populated areas to the Hatirjeel to mitigate traffic congestion on the main avenues which seem to have reached saturation in handling vehicular traffic especially in the peak hours, (iv) prohibiting the entry of slow-moving rickshaws, push carts and tri-cycle vans used for garbage disposal in the most environmentally hazardous manner, (v) restoring automatic traffic signals to replace the inefficient and old-fashioned manual control, (vi) introducing one-way traffic system in some of the internal roads, (vii) giving commercial status to the roads where the residential houses have sharply diminished paving the way for concentration of commercial entities and giving those entities proper permits/licenses, (viii) relocating the easily movable  some other types of non-residential establishments having insignificant capital investment and identified to have been responsible for causing unusual traffic congestion, (ix) undertaking a long-term plan to set up a "Special Hospitality Zone" where allotment of land, utility services and other facilities should be guaranteed for the existing hotels and guesthouses to support their possible relocation, if the situation then so demands and last but not least, (x) taking initiative from the Government side for an immediate discussion with the FHGROAB  to consider the pros and cons of the issue and arrive at a consensus.
At this point of time when the Government is trying to remove impediments to domestic investments and inflow of FDIs, it will be appropriate to recognise the heavily capital-intensive hospitality establishments of Gulshan, Banani, Baridhara and Uttara in particular as valid commercial entities and provide them with proper permits/licenses and other facilities so that they can continue to operate peacefully, contribute to the national exchequer, create employment opportunities, promote tourism and uphold country' image.
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