Research Proposal Tanzila

8/3/2019 Research Proposal Tanzila

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1. Overview of the Global Hotel Industry:

The Hotel Industry comprises a major part of the Tourism Industry worldwide. Historically

viewed as an industry providing a luxury service valuable to the economy only as a

foreign exchange earner, the industry today contributes directly to employment

(directly employing around 0.15 million people), and indirectly facilitates tourism and

commerce.

The hotel industry has experienced tremendous growth since the 1980s and has emerged as a

global industry. With increasing globalization and free flow of people from one corner of the

earth to another for tourism and business purposes, the hotel industry started experiencing

rapid expansion worldwide, which is continuing till date. During the expansion process and

with rise of competition, multinational, multi-brand corporations, such as Hilton Hotels

Corporation, started the process of finding new markets. Today, the hotel industry is a full-

grown industry marked by strong competition. Market share increases typically comes at a

competitor’s expense. Industry-wide, most growth occurs in the international, rather than the

domestic, arena.

For much of their history, hotels were owned and operated by individuals. However, as

franchises and chains began to appear, individually owned hotels found themselves

increasingly at a competitive disadvantage. Recently, use of management companies has

entered the mainstream. As a result, many chains are more involved in management than in

ownership. These chains realize a much more predictable and steady income stream than had

normally been yielded by ownership.

Common classifications of hotels as per American standard are as follows:

Commercial Hotels cater mainly to business clients and usually offer room service, coffee-

shop, dining room, cocktail lounge, laundry and valet service as well as access to computers

and fax services.

Airport Hotels are located near airports and are a conveniently located to provide any level

of service from just a clean room to room service and they may provide bus or limousine

service to the air lines.



Conference Centers are designed to specifically provide meeting space from groups; they

provide all services and equipment necessary to handle conventions.

Economy Hotels provide a limited service and are known for clean rooms at low prices

meeting just the basic needs of travelers.

Suite or All-Suite Hotels are hotels which offer spacious layout and design. Business people

like the setting which provides space to work and entertain separate from the bedroom.

Residential Hotels used to be very popular. The typical residential hotel offers long term

accommodations.

Casino Hotels are often quite luxurious. Their main purpose is in support of the gambling

operation. Casino hotels often offer top name entertainment and excellent restaurants.

Resort Hotels are the planned destination of guests, usually vacationers. This is because

resorts are located at the ocean or in the mountains away from inner cities. Resort hotels may

offer any form of entertainment to keep their guests happy and busy.

While the practice of renting space was not new, the City Hotel opened in New York City in

18th century was supposed to be the first building dedicated exclusively to hotel operations.

For its time, the building was quite large and possessed 73 rooms. Similar operations soon

appeared in such nearby cities as Baltimore, Boston and Philadelphia. Hotels took a distinct

step up in style and class when the Tremont House opened in Boston in 1829. With 170

rooms, the Tremont House was a large facility. In the 1920’s, hotel building entered a boom

phase and many famous hotels were opened, including the Waldorf Astoria, New York’s

Hotel Pennsylvania, and the Chicago Hilton and Towers. Today, American hotel chains have

their presence all around the globe.

In terms of hotel supply, Europe is not only the largest market in the world, but also the most

complex due to the diversity of its hotels and quasi hotels. However, the supply data on the

European hotel industry is dire. The total number of hotels in Europe, far less the number of

rooms and other hotel facilities are little more than a guess. Agencies such as the World

Tourism Organization record the numbers of “hotels and similar establishments”, but it is

based on rough data supplied to them by too few governments – in 2002, only 15 out of 52

European Governments supplied hotel data to the WTO.



Although the total picture in Europe is insufficiently clear we are able to be much more

precise when it comes to hotel chains. The Otus Hotel Brand Database includes all portfolios

in Europe with more than four hotels. This amounts to 280 companies and a whopping 400

hotel brands. The largest 10% of chains account for almost two-thirds of the rooms, while

the smallest 10% account for only 0.5%. The hotels are classified as given below:

Hotel Configuration

Sub-variables Hotels Rooms Average size Room %

Hotel Resorts 786 173000 220 13.5%

Full Feature Hotels 2947 521600 177 40.8%

Basic Feature Hotels 3014 286270 95 22.4%

Limited Feature Hotels 2259 185470 82 14.5%

Rooms Only Hotels 1669 111770 67 8.7%

Total 10675 1278110 120 100.0%

Source: Otus Hotel Analyst Size & Structure Report; Vol-1, Issue – 6, 2010, Otus & Co.

Let us now have a look at the hotel industry of Bangladesh’s closest neighbor, India. A touch

of tenderness, a helping hand, a welcoming visage - the Indian hospitality sector is certainly

the most apt replication of the belief 'Atithi devo bhava' (guest is god). Good quality products

and services at affordable prices should be the USP of any successful venture - and hotels in

the country boast of exactly this!

Prior to the 1980s, the Indian hotel industry was a slow-growing industry, consisting

primarily of relatively static, single-hotel companies. However, the subsequent partial

liberalization of the Indian economy generated tourism interest in India, with significant

benefits accruing to the hotel and tourism sector, in terms of improved demand patterns.

Growth in demand for hotels was particularly high during the early 1990s following the

initiatives taken to liberalize the Indian economy in FY1991, as per the recommendations of

the International Monetary Fund (IMF). The euphoria of the early 1990s prompted major

chains, new entrants and international chains to chalk out ambitious capacity additions,

especially in the metropolitan cities. However, most of these efforts were directed towards

the business travelers and foreign clientele.

According to the world travel and tourism council, the growth in the hospitality industry is

pegged at 15% every year, and with 2,00,000 rooms (both luxury and budget) needed in the



country, the segment is poised for a stupendous growth. While the high influx of foreign

tourists has ensured huge footfalls for the sector over the years, internal tourism too has, off

late, begun offering great potential. With travelers taking new interests in the country, players

in the hospitality sector have had to offer the best of services, at affordable prices. In

addition, with the USD 23 billion-software services sector pushing the Indian economy

skywards, more and more IT professionals are flocking to Indian metro cities, thus signaling

a boom time for the hotel and hospitality segment. Several other factors such as

Commonwealth Games in Delhi, World Cup Cricket 2011, Indian Premier League (IPL) as

well as Champions League T20 have fueled the need further and will do the same in the next

seasons of the mentioned sports events and in ICC T20 World Cup, 2016 as well.

According to “Bharat Book Bureau”, published in January 17, 2009, Revenues of Hotel and

Restaurant (H&R) industry in India during the financial year 2006-07 was INR 604.32

billion, a growth of 21.27% over the previous year, primarily driven by foreign tourist

arrivals, which increased by 14.17%. Currently there are some 1,980 hotels approved and

classified by the Ministry of Tourism, Government of India, with a total capacity of about

110,000 hotel rooms. The hospitality industry which was expected to reach INR 826.76

billion by 2010 is poised to grow at a faster rate. It is estimated that over the next two years

70,000-80,000 rooms will be added across different categories throughout the country.

Future Investments:

•Indian Hotels Company (Taj Group) plans to construct 50 budget hotels

under the Ginger brand in the next four years.

•East India Hotels plans to develop 750 additional hotel rooms under the

Trident brand in the next 2.5 years.

•Carlson plans to increase its presence in India to 78 hotels by 2012, from

28 in 2009.

•Marriott plans to open 30 hotels in India in the next three years.

•Hyatt Group has plans to open 15 new hotels in by 2015

Source: Rediff Business website, The Hindu website, HospitalitybizIndia.com

The above information is enough to give an idea about the sheer size and importance of

the hotel industry in India and the significant role that the industry plays in the country’s



economy. Now let us have a glance at the hotel industries of two more Asian countries,

Nepal and Vietnam respectively, which could be more relevant examples for Bangladesh,

and try to understand the dynamics of the industry.

According to Hotel Association of Nepal (HAN) business in the hotel industry has grown by

nearly 15% in the current fiscal year as compared to previous years. The hotel industry is

considered to have the highest local private sector investment in Nepal with a recorded

investment of around Rs. 100 billion. HAN has under its umbrella, 8 five-star, 3 four-star, 12

three-star, 22 two-star and 18 one-star hotels and 165 non-star, four allied and 33 resorts.

There are 307 hotels including 42 outside the valley, which have 22,661 rooms with 34,958

beds in the country.

An international trade group, Implementing Expert Group (IEG) is planning to launch two

four-star hotels -Airport Hotel and Red Rose Apartment Hotel – in Kathmandu with an

investment of more than Rs. 1billion, by 2011. These establishments will focus on up-market

clientele without compromising on quality. Airport Hotel will have 55 rooms in 5 floors,

while Red Rose will have 11 apartment and 30 rooms..

Hospitality is Nepal's one of the largest industry and could generate additional jobs across the

country. Realizing the job creation potential of the industry HAN is raising awareness across

government, media and the public of the importance of hotel industry and the crucial role it

plays in the Nepal's economy.

Coming to Vietnam, Grant Thornton Vietnam (which is one of the world's leading

organizations of independently owned and managed accounting and consulting firms) has

recently released the results of their annual Vietnam Hotel Survey. Survey results showed

that 2010 was one of the brightest years on record, with the numbers of domestic and foreigntourists reaching new heights. This excellent performance is contributing to an overall

increase in hotel rooms and occupancy rates.



The Vietnamese hospitality market performed better in 2010 than at any time since before the

financial crisis. The number of international arrivals increased year-on-year, by 34.8%,

*RevPAR = Revenue per Available Room

leading to a rise in room rates to an average of USD83.30 per night.

The average occupancy rates for high-end hotels in Vietnam increased in 2010 by 1.9%,

whilst the average room rate increased was far more significant, with a 6.8% increase overall.

When the data contained in the Hotel Survey report is dissected into star rankings, the most

notable was the good news for 4 and 5 Star hotels who increased their occupancy rates by

5.3% and 5.0%. Disappointingly, 3 Star hotels' occupancy rates decreased by an average of

1.6%. The change in these figures demonstrates a shift in overall demand by customers

towards to a higher quality of hotels. Travelers are selecting their hotels according to

facilities and services rather than price alone.

An increase of average room rates overall in 2010 was reflected in the increase in RevPAR,

the measure in the hotel industry indicates how well the hotels filled their available rooms

(regardless of price) in both the high and low seasons. RevPAR across the industry showed

an overall rise from USD44.63 to USD49.76 in 2010. Among the three categories, 4 Star

hotels accounted for the largest increase, at 15.0% compared with 2009. 3 Star hotels

increased RevPAR by more modest 5.8% and 5 Star hotels improved by 10.3%.

This year, Grant Thornton also studied hotels' expansion plans over the next 2 years and the

percentage of hotels conducting the Customer Satisfaction Surveys in 2010. The results



showed that because of their progress, 42.6% of hotels surveyed are planning to expand or

improve facilities over the next 2 years. This was consistent across all Star categories.

Official statistics showed a dramatic increase in the number of international visitors to

Vietnam from all markets at 34.8% to over 5 million in 2010. In addition, the percentage of

hotel stays by Domestic guests continued to rise (+3.6%) which reflected the growing

number of local travelers choosing to spend their holidays closer to home and stay at higher-

end hotels.

So, overall we can see that all across the globe, be it in the developed world or in the

developing countries, hotel industry makes a very significant contribution to the country’s

economy. Of course, the fact remains that the hotel industry worldwide is also one of themost volatile. Especially, the current global economic downturn shook the industry well.

Reducing operating costs is one clear way for players in the hotel sector to minimize the

impact of the downturn, but there are other ways to protect their business by taking recession-

proofing measures. The hotel sector can learn from other sectors, such as retail, which have

already felt the impact of the recession. A prudent step would be to conduct a full audit of

your supply chain contracts to ensure that they are robust, relevant and put you on the right

side of the law.

Despite everything, the hotel industry is experiencing tremendous growth worldwide and is

expected to have even better potentials for the future. In today’s race of globalization and

virtual merging of all countries into one single global village, the hotel industry is certainly

one of the prime most thrust sectors in which ever country we talk about. And Bangladesh is

certainly no exception.

2. Overview of the Hotel Industry in Bangladesh:

The beginning of the hotel industry in Bangladesh can be traced back to the 1950s and 1960s

when the Water and Power Development Authority built large number of rest houses in the

then East Pakistan. In the 1960s Bangladesh Parjatan Corporation (BPC) also started building

hotels and motels all over the country in order to promote tourism. The government

inaugurated the first five star hotel of the country – the then hotel Intercontinental (later



known as Dhaka Sheraton, and now Ruposhi Bangla) in the year 1966. After liberation, in

1972 the Bangladesh Govt. took over its ownership. Today, the Ministry Of Civil Aviation

and Tourism of the government of Bangladesh maintains authority over the Dhaka Sheraton

Hotel through Bangladesh Services Limited. Also in the 1960s Hotel Shahbag was built

which was later converted into a post graduate medical college.

There were some other hotels at Dhaka and at the main cities of the country but quality of

those was not at international level. It is from early eighties that the Bangladesh Travel and

Bangladesh hotel industry began to shape up. Beginning of eighties can be marked in respect

to the development of this country for various reasons. The most important event that boosted

Bangladesh Tourism and Hotel industry was a new international standard airport with

international standard infrastructure and runways. With this new airport named Zia

International airport (now Shah Jalal airport) in operation, the number of foreign flights rose

sharply. Other significant factor of early eighties was participation of national and

international NGOs in socio-economic development of the country. To initiate, implement,

monitor and evaluate their socio-economic projects, the number of foreigner visitors rose

sharply. This caused an increasing demand of quality hotels, motels and other related

infrastructure all over Bangladesh. Again, it is in the early eighties when this country started

its journey as garment manufacturer and began to supply a bulk quantity of EEC, USA and

Canada apparel need. Temporary and permanent residency of foreign nationals increased

considerably to support newly developed garment industries and trade.

The reasons above forced the 2nd 5 star hotel in the capital - Pan Pacific Sonargaon to begin

its operation in 1982. For long, top-level accommodation situation in Dhaka remained the

same with only about 800 rooms in three hotels of international standard - Sonargaon,

Sheraton (now Ruposhi Bangla) and Purbani. No effort was made to increase the capacity of

high-class hotel accommodation in Dhaka for a long time.

But the scenario started changing after the late 1990s. Starting from mid 1990s, Bangladesh

started experiencing a fast growing trend in the number of foreign arrivals, more so since the

year 2000. The following table and graph shows the number of foreign visitors to Dhaka in

the last few years:



Number o f Fore ign V is i to rs to Ban

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

500,000

Number o f Fo

Trend Line

(Source: Bangladesh Parjatan Corporation Website)

However the increase in foreign visitors to the country mainly consists of business travelers

and only a few tourists. Bangladesh Parjatan Corporation recorded that about 60% of the

visits were for business purposes and only 40% were for tourism - that also defined very

broadly. Several factors like shift of policy towards more liberation of trade and commerce,

reform measures for structural change, infrastructure development, involving private sectors

in various forms, encouraging FDI, and setting up of EPZs, have improved the business travel

scenario. Businessmen from India and China followed by Japan are currently dominating the

corporate guest mix. US businesses are also expected to come in. The guests also include

businessmen eager to clinch deals in RMG, gas exploration, machinery and of course, airlines

crew.

Along with the growth in foreign visitors, the hotel industry also saw good expansion. The

main growth took place in Dhaka – the hub of all business activities, and hence, for the

purpose of this report we will focus on the capital only. Mainly, there was an influx of qualityguesthouses and several small but reasonable quality hotels in the private sector. The size of

these hotels is between 20 to 150 rooms. Most of these are equipped with reasonably good

facilities like dining, cable TV, IDD telephone, fax etc. In addition to these hotels, there

developed about 60 Guest Houses with average of eight to 10 rooms and equipped with cable

TV, IDD telephone, Fax, e-mail etc.

So, as we can see that the growth mainly came from the mushrooming of guest houses and

“boutique” hotels, especially in the Gulshan and Banani areas in Dhaka. The term boutique

Year

Number of

Foreign

Visitors

2000 199,211

2001 207,1992002 207,246

2003 244,509

2004 271,270

2005 207,662

2006 200,311

2007 289,110

2008 467,332

2009 267,107



hotel means limited facility hotel. Though most of theses hotels provide reasonable standard

services and claim themselves to be two/ three stars, it is difficult to bring them under any

star classification as there are no strict criteria or regulatory body to decide in this matter.

Their total number is also difficult to specify as many of these hotels are often not properly

registered and do not pay VAT and taxes.

However, much growth has not taken place in the five or four star category. It was only in the

second half of the last decade that two new hotels - 214-room 5-star Radisson Blue Water

Garden Hotel at airport road and 241-room 5- star Westin Dhaka, were opened. Dhaka

Regency and Sarina and few other properties of higher quality but no brand or star

recognition started operation during the same time.

Today, the accommodation providers in Dhaka can be classified into three main categories:

- Five or Four star luxury hotels

- Smaller star rating hotels, like 2 or 3 stars

- Limited facility or boutique hotels and guest houses

Of these three categories, Bangladesh still lacks true international standard five and four star

properties. At present, there are only about 4 five star hotels operating in Dhaka – Pan Pacific

Sonargaon Hotel, Ruposhi Bangla, The Westin Dhaka, and Radisson Water Garden. Though

there is a couple more claiming themselves to be five stars, they do not quite meet the

internationally prescribed criteria to support their claims. Even, as secondary sources reveal,

questions have been raised time and again, both locally and by foreign visitors, about whether

all the aforementioned four properties are properly meeting five star standards. The situation

is especially grim if compared to our neighboring Asian countries most of which have

numerous luxury five star hotels to boast off.

3. Gap Analysis and Problem Identification:



As has been mentioned earlier, the number of foreign visitors to the country mainly

comprises of business travelers and this group of people mainly prefers luxury hotels.

Boutique hotels are more relevant for budget travelers and tourists. Hence, industry experts

are of the opinion that given the growing economy of Bangladesh there is a huge potential for

more international standard accommodation facilities and luxury hotels. The existing five star

hotels already have a very high occupancy all year round proving the profitability of the

sector. Besides, there is a huge crowd staying at the guest houses and boutique hotels, who

could shift to luxury hotels if there were more options.

While talking to “The Bangladesh Monitor” – the leading fortnightly tourist journal of

Bangladesh, Andre A. Gomez - GM, Radisson Water Garden Dhaka said, “The number of

five star hotels even in Dhaka is not enough. Occupancy this year has been the best in four or

five years. We feel we can grow the business even further. We have also received record

number of enquiries not only from executives, organizations, companies but also other hotels.

This is a very strong showing indeed. Very few countries including Singapore can match

these figures. If this trend continues, this year will be a record for Radisson Water Garden

Dhaka in terms of both revenue and occupancy. In addition to repeat guests, there has been

influx of businessmen from new organizations coming in for new ventures - RMG has been a

major segment. Airlines are trying to get into this country. It augurs well for us - connectivity

is important for hotels and airline crews are important customers. "

In the past years, there were talks about building five star hotels in private sector. Among

these were, Holiday Inn, Central Sheltech Hotel, Airport Hotel, Hyatt Regency Hotel, Hilton

Hotel, Oberoi Hotel, etc. But none of these projects have seen any progress. The work of two

five star hotels beside the Shahjalal International Airport are long pending. At present,

Unique Hotel and Resorts Ltd, the owning company of Westin Dhaka has decided to build

second Westin (to be more appropriate, the extension of the existing one) in Gulshan and a

Le Meridien hotel in Banani. Noor Ali, the owner of the property, mentioned that demand for

5-star accommodation in Dhaka is at present increasing at the rate of 15 per cent a year and in

coming years the demand will be increased further.

There are a number of other luxury properties in the pipeline. In next two to five years, about

2000 new rooms are expected to be added to the existing number of hotel rooms in the Dhaka

city alone. Notable among these are Al Amin Hotel at Airport Road, Six Seasons at Gulshan,

Platinum Suites-2, Heritage Hotel at Zero Point and Doren Suites & Hotels. All these



properties would be operated by private, are expected to be open in 2012, except Heritage

Hotel which scheduled to open in 2013. St. Regis at Gulshan, operated by Starwood is

expected to go into operations in 2014 or the next year. It is learnt that big brands like Six

Seasons, St Regis, Four Points by Sheraton, Courtyard by Marriott, Hyatt or Crowne Plaza

are expressing interest to manage hospitality properties in Bangladesh. But how many of

these projects will finally be implemented is a big question in itself.

There is also growth outside Dhaka. In Cox's Bazar Long Beach has opened, Ocean Paradise

will open shortly and in Chittagong and Sylhet two to three new hotels will open within two

years. There is also growth in other cities.

Hotel investment is the new trend among entrepreneurs. Investment is also giving better andfaster returns. Earlier, hotel industry lacked management skills and the entrepreneurs had no

idea of rate of return. After jute, garments, housing construction, the local entrepreneurs are

opting for hotels, said a hotel professional. She asserted that with the increase in domestic

tourism, change in people's attitude, and increase in disposable income, demand for hotel

rooms will continue to rise.

With the increase in the capacity of the hotel the demand for skilled manpower is also rising.

About 40000 skilled manpower will be needed by 2015 to run about the 2000 new hotel

rooms.

Shahid Hamid FIH, Executive Director, Dhaka Regency Hotel and Resort - a hospitality

professional of over three decades, regretted the lack of data which made it difficult for

making forecasts. He, however said, there will be competition, the quality will improve, the

rates will come down and there will be more options for the guests. However, welcoming the

arrival of the new planned hotels, Hamid expressed the apprehension that there will beunplanned growth in absence of a regulatory body. As there is no regulatory body, there is no

uniformity in basic standard criteria.

Standard Operating Procedures for hotels is absent. There is also absence of operating

strategy, hiring, training, rate and service charge fixation, lack of compensation (salary)

structure. Owners also do not think of operating companies before constructing the building.

They (operating companies) come as an afterthought. He stressed the need for regulation to

halt unplanned growth.



2) CURRENTSITUATION

the countrylacks in trueinternationalquality luxuryaccommodation facilitieshotel industry

mainlydominated byboutiquehotels andguest housesonly about 4five star hotelsoperating inDhaka withvery highoccupancy allyear round

no strictcriteria orregulatorybody to decideregarding starclassificationor ensureuniformstandardssupportinginfrastructure

like skilledmanpower,hotel traininginstitutions,governmentpolicyframework, taxstructure, etc.

3) CLOSING THE

“GAP”

What are the

true prospectsof the hotelindustry?Can the markettruly sustainmore luxuryhotels?What are thehurdles facedby the industryand how can

they beremoved to helpthe industryflourish better?How to judgethe hotelstandards?

1) FUTURE

PREDICTIONS

The economy isgrowing fast

Businesstraveling isincreasing rapidlyand they preferluxury hotels thanboutique housesExpert opinionsays we needmore 5-star/4-starluxury hotels inDhakaDemand for 5-

staraccommodationin Dhaka is atpresentincreasing at therate of 15 percent a year and incoming years thedemand willincrease furtherA number of

luxury propertiesare in thepipeline, but theirgrowth isunplanned andfuture uncertain

Stressing the need for developing professional approach, Shahid Hamid said, hotel is not just

accommodation and food; it's the reflection of a country. First impressions about a country

are created here. We all desire good tasty food and clean hygienic accommodation. Who

would ensure those? Waiters, houseboys, cooks are trained by the local institutes, but there is

no institute to train management and supervisory personnel. Development of human

resources (HR) is yet to gain importance as most of the local hotel owners lack professional

approach in operating a hotel.

Some 30,000 to 40,000 trained, skilled professionals will be needed in the country for the

hospitality sector alone. But where are the personnel? Shahid Hamid posed the question. No

entrepreneur is investing in developing human resources for hotels. Human resources

development is needed for all service sectors. It would be impossible to maintain hospitality

standards without HR development.

Why management companies are coming but no international investors are not coming with

equity, is another important question that needs to be answered. For the smooth development

of hotel industry, there is urgent need of simplification of bureaucratic procedures in addition

to a efficient regulatory body.

The most important action the government must take is to substantially reduce taxes on the

hotel and on its sales. Since for the first time private sector is coming in increasing number in

these capital-intensive ventures, the government, like the governments of other countries of

the world should provide adequate incentives to encourage private sector.

So, the prospects and problems of the hotel industry is an important issue of concern in the

present day context. What are the true prospects of the industry? Can the market truly sustain

more luxury hotels? What are the hurdles faced by the industry and how can they be removedto help the industry flourish better? These are some of the questions that need to be addressed

immediately. Apart from discrete opinions and discussions, no systematic study has been

conducted so far to unveil this areas and that is what this report exactly aims at doing.

The following graphical model tries to depict the total GAP analysis as a gist to help clarify

objectives, current realities, and action steps:



4. Problem Statement:

From the given GAP analysis we can find out the following problem statements for our

research.

Management Decision Problem:



“To identify the problems and prospects of 4/5-star luxury hotels in Dhaka”

Marketing Research Problem:

“To determine and analyze the factors influencing the demand and supply scenario of 4/5-star

luxury hotels in Dhaka”

5. Objectives:

Broad Objective:

To investigate the problems and prospects of the hotel industry in Bangladesh with respect to

the demand for and supply of 4/5 star luxury hospitality services in the country’s capital.

Specific Objectives:

• Analyze the dynamics of the current hotel industry in Dhaka

• Evaluate the standard of existing hotels with respect to international guidelines

• Study the market and reveal the actual demand scenario for luxury hotels in Dhaka

• Investigate the current and future supply scenario for the industry and identify

possible market gaps

• Detect the problems deterring the growth of the industry, if any

• Recommend effective strategies to expedite the development of the hotel industry

6. Scope:

The geographic scope of the research is confined among the hotels and clientele within

Dhaka. Moreover, the report will consider only the higher-end/luxury hotels of the city

excluding from the scope of our research the smaller establishments catering to a lower-endclientele.



7. Limitations:

As per our proposed research design, a number of factors may limit the strength of our

findings and recommendations.

• We are only to consider the hotels and their client pool within the geographic confines

of Dhaka city. This removes the other major cities of considerable economic and

market importance from the scope of our research. Hence, the ultimate findings will

disclose only the problems and prospects of the segment of the industry based in the

country’s capital, rather than those of the overall hotel industry of Bangladesh.

• Since our demand side quantitative analysis will involve sample frames consisting of

foreigners, we are unlikely to be able to avail a large enough sample size necessary

for the proposed analyses.

• We shall be collecting relevant information through questionnaires. Hence a

reasonable level of non-response is expected. The effects of these inadequacies will

be adjusted for using relevant techniques.

8. Methodology:

Secondary Research:

We have already made some progress in secondary research by doing literature review of

existing journals and publications regarding tourism, hotels and hospitality management such

as The Bangladesh Monitor – the leading fortnightly travel journal of the country. However,

further secondary study of tourism journals and periodicals will be undertaken as and when

required.

Primary Research:

Our primary research is to be conducted in two parts consisting of a quantitative analysis to

evaluate the market demand and supply scenario and a qualitative analysis to recognize what

the ideal situation should be as per experts’ opinion. The outcomes of these analyses are to be

compared to propose possible market reforms.

9. Research Design:



The studies will be conducted on two sets of population, one representing the demand side

and the other the supply side of the hotel industry. The sample covering the demand side will

represent the population of mostly business travelers who value comfort and luxury. The

supply side sample will represent the high-end hotels catering to the abovementioned

clientele.

Quantitative Study:

A quantitative study of the demand and supply sides of the hotel industry will help us apply

statistical and mathematical tools to the empirical data obtained and allow us to develop

useful and reliable models, theories and/or hypotheses pertaining to the phenomena.

The blueprint of the quantitative study is presented in the following table:

Supply Side Demand Side

Sampling Frame Online/hardcopy hotel directories No complete list of clientele base available

Sampling Element HotelsIndividuals from existing and potential

clientele

Sampling Unit Individual management staff Individuals from existing and potential

clientele

Sampling Method Non-probabilistic quota sampling Non-probabilistic quota sampling

Sample Size

Quotas:1. Five or Four star luxury hotels

2. Smaller star rating hotels, like 2

or 3 stars

3. Limited facility or boutique

hotels and guest houses (Taking

clusters of 3 from each quota)

Quotas:

1. Online respondents

2. Current hotel guests/foreign

visitors

3. Missions/NGOs/Embassies

(Taking clusters of 30 from each quota)

The required data will be obtained by issuing questionnaires to suitable individuals within the

sample frame.

Qualitative Study:

Qualitative studies are conducted “to gather an in-depth understanding of human behavior

and the reasons that govern such behavior” (Wikipedia). Through this technique we hope to

go beyond the numbers and data obtained through our quantitative research and derive



inferences regarding the current market scenario. As is often the norm of such studies, we

shall be using a small but focused sample group of industry experts and critics.

The following research tools will be used to obtain expert opinion:

• Focus Group Discussion

: 6 experts (Including 2 from Tour Operators’ Association of Bangladesh, 2 from

Travel Journal, 2 from Upper management Hotel staff.)

• Key Informant Interview

Sampling Method: Judgmental Sampling

10. Types of Analyses:

Though details of analysis is hard to specify at the moment, the probable analyses that would

be conducted to identify the relationship between the different variables from the demand and

supply sides and the development prospects of the hotel industry, will include:

• Hypothesis tests

• Regression and correlation analysis

• Factor analysis

11. Activity GANTT Chart:

Our market research project started on August 16, 2011 with the process of secondary search

of information. We continued the project with subsequent steps of problem identification and

secondary literature review, finalization of the topic and proposal preparation. Later we will



move forward with the steps of qualitative and quantitative survey and finally we expect to

submit the final version of the report on December 15, 2011. Thus the expected duration

project is almost 4 months. The sequence of activities along with their respective durations is

shown in the activity Gantt chart below:

12. Estimated Budget:

Any survey project requires several types of expenses for transportation, arranging Focus

Group Discussion or Key informants Interview, printing and other miscellaneous expenses.

The estimated budget of our project is shown below:



Transportation Costs:

Out main transport will be CNG taxi and average CNG taxi fare per round trip = Tk. 300

Fares for trip to hotels = Tk. 300 per round trip X 9 hotels = Tk. 2,700

Additional trips for KII and FGD = Tk. 300 X 6 = Tk. 1,800

Other transportation cost = Tk. 1,000

Printing Costs:

Printing cost of the project proposal = 15 pages X Tk. 5 per page = Tk. 75

Printing cost of questionnaire = 2 pages X Tk. 5 per page X 90 copies = Tk. 900

Printing cost of the Report = 80 pages X Tk. 5 page X 2 copies = Tk. 800

Total estimated printing cost = Tk. 1,775

Miscellaneous Costs:

Miscellaneous Costs = Tk. 3,000

Total Budget = Tk. 10,275

[N.B. All costs are based on approximation and they may be subject to changes]

13. Organization and Division of Work:

As a group, all of our members took part in brain-storming for the project idea and literature

review. For the further works related to this research, we assign them as follows:



Work Assigned Members

FGD Rafia

KII 2

Questionnaire Preparation 3

Survey (Demand Side) 3

Survey (Supply Side) 2Report Writing 5

14. Conclusion:

The hotel industry is one of the most lucrative industries worldwide and plays an important

role in a country’s economy. Be it in the developed world or in the developing countries, the

hotel industry is experiencing tremendous growth worldwide and is expected to have even

better potentials for the future. In today’s race of globalization and virtual merging of all

countries into one single global village, the hotel industry is certainly one of the prime most

thrust sectors in any country we talk about. And Bangladesh is certainly no exception.

Bangladesh has been experiencing a steady increase in the number of foreign visitors in the

past few years, consisting mainly of business travelers. Several factors like shift of policy

towards more liberation of trade and commerce, reform measures for structural change,

infrastructure development, involving private sectors in various forms, encouraging FDI, and

setting up of EPZs, have improved the business travel scenario. Given the growing economy

and increasing business activities in the country, this trend is only expected to accelerate in

the future. This group of business travelers mainly prefers luxury hotels. But the current hotel

industry in the country is dominated by boutique hotels (limited facility hotels) and guest

houses. Though most of theses hotels provide reasonable standard services and claim

themselves to be two/ three stars, it is difficult to bring them under any star classification as

there are no strict criteria or regulatory body to decide in this matter.

The current accommodation providers in Dhaka can be classified into three main categories:

Five or Four star luxury hotels, Smaller star rating hotels, like 2 or 3 stars, and Limited

facility or boutique hotels and guest houses.

Of these three categories, Bangladesh still lacks true international standard five and four star

properties. At present, there are only about 4 five star hotels operating in Dhaka – Pan Pacific



Sonargaon Hotel, Ruposhi Bangla, The Westin Dhaka, and Radisson Water Garden. Industry

experts are of the opinion that there is a huge potential for more international standard

accommodation facilities and luxury hotels. The existing five star hotels already have a very

high occupancy all year round proving the profitability of the sector. Besides, there is a huge

crowd staying at the guest houses and boutique hotels, who could shift to luxury hotels if

there were more options. Already a number of luxury properties are in the pipeline. In next

two to five years, about 2000 new rooms are expected to be added to the existing number of

hotel rooms in the Dhaka city alone. Notable among these are Al Amin Hotel at Airport

Road, Six Seasons at Gulshan, Platinum Suites-2, Heritage Hotel at Zero Point and Doren

Suites & Hotels.

But industry experts also feel that much of this growth is unplanned in the absence of a

regulatory body. As there is no regulatory body, there is no uniformity in basic standard

criteria as well. There are also doubts about how many of these projects will at all be

implemented. In the past years, there had been several talks about building five star hotels in

private sector. Among these were, Holiday Inn, Central Sheltech Hotel, Airport Hotel, Hyatt

Regency Hotel, Hilton Hotel, Oberoi Hotel, etc. But none of these projects saw any progress.

Several factors are thought to be hampering the proper growth of this industry. Lack of

skilled manpower and hotel training institutions, unfavorable government policy framework

and tax structure, absence of a regulatory body to ensure planned growth and uniform

standards etc., are just some of the commonly cited problems.

So, the prospects and problems of the hotel industry is an important issue of concern in the

present day context. Identifying the right factors and approaches can actually make a

significant contribution to the development of this industry. What are the true prospects of the

industry? Can the market truly sustain more luxury hotels? What are the hurdles faced by the

industry and how can they be removed to help the industry flourish better? These are some of

the questions that need to be addressed immediately. Apart from discrete opinions and

discussions, no systematic study has been conducted so far to unveil this areas and that is

what this report exactly aims at doing.

This brings us to our problem statement for this research: “To identify the problems and

prospects of 4/5-star luxury hotels in Dhaka” . A quantitative study involving questionnaire

survey will be conducted on two sets of population, one representing the demand side and the

other the supply side of the hotel industry. On the other hand, the report will also use



qualitative research in the form of FGD and KII on a small but focused sample group of

industry experts and critics to go beyond numbers and derive inferences regarding the current

market scenario. This way we expect to address the problem statement and come up with

meaningful findings and recommendations for the development of the industry.

Research Proposal Tanzila

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Transcript of Research Proposal Tanzila