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 fullgrown industry marked by strong competition. Market share increases typically comes at a competitors 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, coffeeshop, 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 1920s, hotel building entered a boom phase and many famous hotels were opened, including the Waldorf Astoria, New Yorks 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 Hotel Resorts Full Feature Hotels Basic Feature Hotels Limited Feature Hotels Rooms Only Hotels Total

Hotels 786 2947 3014 2259 1669 10675

Rooms 173000 521600 286270 185470 111770 1278110

Average size 220 177 95 82 67 120

Room % 13.5% 40.8% 22.4% 14.5% 8.7% 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 Bangladeshs 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 benefits accruing to the hotel and tourism Growth in demand for hotels was subsequent partial liberalization of the Indian economy generated tourism interest in India, with significant sector, in terms of improved demand patterns. 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 countrys

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 foreign tourists 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 higherend 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 countrys economy. Of course, the fact remains that the hotel industry worldwide is also one of the most 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 recessionproofing 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 todays 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:

N um ber of F oreign V is itors to B anglades h 50 0,000 45 0,000 40 0,000 35 0,000 30 0,000 25 0,000 20 0,000 15 0,000 10 0,000 50 ,000 0

Number of Foreign Visitors 199,211 207,199 207,246 244,509 271,270 207,662 200,311 289,110 467,332 267,107

Year 2000 2001 N um ber of F o reign V is 2002 itors 2003 Trend Line 2004 2005 2006 2007 2000 2001 200 2 2003 2004 2005 2006 2007 2008 2009 2008 (Source: Bangladesh Parjatan Corporation Website) 2009

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 quality guesthouses 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

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 and faster 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 be unplanned 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.

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

2)development is needed for all service sectors. It would be impossible to maintain hospitality CURRENT standards without SITUATIONHR development.
the country 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 international to a efficient regulatory body. n facilities
accommodatio

lacks in true

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

1) FUTURE PREDICTIONS

The economy is growing fast hotel industry Business mainly The most important action the government must take is to substantially reduce taxes on theis traveling dominated by boutique hotel and on its sales. Since for the first time private sector is coming in increasingincreasing rapidly number in and they prefer hotels and these capital-intensive ventures, the government, like the governments of other countrieshotels than luxury of guest houses boutique houses only about 4 the world should provide adequate incentives to encourage private sector. Expert opinion five star hotels says we need operating in 3) the hotel industry more the Dhaka with and problems ofCLOSING THE is an important issue of concern in5-star/4-star So, the prospects luxury hotels in very high GAP present day context. What are the true prospects of the industry? Can the market truly sustain Dhaka occupancy all Demand for 5What are the year round more luxury hotels? What are the hurdles faced by the industry and how can they be removed star true prospects no strict of the hotel criteria or to help the industry flourish better? These are some of the questions that need to beaccommodation addressed in Dhaka is at industry? regulatory immediately. Apart from discrete opinions and discussions, no systematic study has been present Can the market body to decide increasing at the truly sustain this report exactly aims at doing. regarding star conducted so far to unveil this areas and that is what rate of 15 per more luxury classification cent a year and in hotels? or ensure coming The following graphical model tries What are the GAP analysis as a gist to help clarify years the uniform to depict the total demand will hurdles faced standards objectives, current realities, and action steps:industry increase further by the supporting A number of and how can infrastructure luxury properties they be like skilled are in the removed to help manpower, pipeline, but their the industry hotel training growth is flourish better? institutions, unplanned and How to judge government future uncertain the hotel policy standards? framework, tax structure, etc.

favorable

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 countrys 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-end clientele.

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 countrys 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 Online/hardcopy hotel directories Hotels Individual management staff Non-probabilistic quota sampling Quotas: 1. 2. Sample Size Five or Four star luxury hotels Smaller star rating hotels, like 2 or 3 stars facility or boutique Demand Side No complete list of clientele base available Individuals from existing and potential clientele Individuals from existing and potential clientele Non-probabilistic quota sampling Quotas: 1. Online respondents hotel guests/foreign visitors 3. Missions/NGOs/Embassies (Taking clusters of 30 from each quota)

Sampling Frame Sampling Element Sampling Unit Sampling Method

2. Current

3. Limited

hotels and guest houses (Taking clusters of 3 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 FGD KII Questionnaire Preparation Survey (Demand Side) Survey (Supply Side) Report Writing

Assigned Members Rafia 2 3 3 2 5

14. Conclusion:
The hotel industry is one of the most lucrative industries worldwide and plays an important role in a countrys 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 todays 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.