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Sun 8 Jan 2017 02:05 PM

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Gov't action plan needed to help hotels overcome financial challenges in Bahrain, say experts

Four and five-star hotels reported an average room occupancy rate of 40 percent in 2016 while occupancy rate fell from 56 percent in 2015 to 49 per cent in 2016

Gov't action plan needed to help hotels overcome financial challenges in Bahrain, say experts

Bahrain’s government needs to implement an action plan in order to help hotels overcome financial challenges such as low room occupancy rates and increased overhead costs, with four and five-star hotels having reported an average room occupancy rate of 40 percent last year, experts said.

The industry took a hit in 2015 due to low oil prices and remained slow throughout 2016, Bahrain Four Star Hotels Committee chairman Hameed Al Halwachi told Gulf Daily News.

Despite a busy calendar set by authorities, the events targeted a local audience rather than a regional or international one, he said.

Al Halwachi added that the average 40 percent room occupancy was “not even close to breaking even” with high overhead costs despite efforts by the Bahrain Tourism and Exhibitions Authority (BTEA) to attract visitors through promotions, roadshows and other campaigns.

“Utility bills along with prices of alcohol have increased which has to be dealt with by hotel owners and even passes on to the customer. There were some hotels who did not even pay their staff because their business was down,” he said.

“We are also seeing three-star hotels which are upgraded to four-star properties only focusing on nightlife for their revenues, which has led to some outlets violating the law and having their licences cancelled.”

Another challenge hotels face is competition from cheaper furnished luxury apartments, which GCC visitors steered towards as they “have become smart in their spending, looking for the best deals and not [spending] like before,” he said.

The chairman added the hotel business in Bahrain is like a “sea wave that starts from January 15 until May” when conferences are held and visitors fly in. He said business is then slow from June to September, especially in Ramadan when hotels have 5 per cent to 10 per cent occupancy rates and people only come to have iftar meals.

The occupancy rate for the first quarter of 2016 was 49 per cent compared to 56 per cent in 2015, according to a tourism survey conducted by the Information and eGovernment Authority.

The Gulf island state aims to attract revenues of $2.7b (BD1b) per year from tourism by 2020.

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