An official of Ruposhi Bangla explains why
A lack of trust widened the rift between the government and Starwood Hotels and Resorts, leading the international hotel chain to fold its Dhaka Sheraton operations, an official said Saturday.
“Disagreement between Starwood and the government over such issues as renovation costs or deadlines was not the main reason for the dispute. It was a lack of trust,” said Mahfuzur Rahman, general manager of Ruposhi Bangla.
The government was willing to accept any condition from Starwood but did not get any positive response from the hotel chain, he claimed. Instead, new conditions poured in, he added.
Ruposhi Bangla, a new company formed by state-owned Bangladesh Services Ltd (BSL) that owns the hotel, took over the hotel after Dhaka Sheraton ended its 27 years of operations on Saturday. The hotel has been named Ruposhi Bangla, which will be its title name from now.
“Starwood had been demanding a quick and world-class renovation since the contract expired in 2008. Here the government had to play a very crucial role, as it had to modernise the hotel and it had to protect the interest of its employees at the same time,” Rahman said.
The government responded to the Starwood proposal, agreeing to spend $15 million for renovation, on condition that Sheraton would have to execute the renovation work in phases and without shutting the business down.
“Later, Starwood asked for formulation of a property improvement plan (PIP) and the government accepted those recommendations as well,” Rahman said.
According to the PIP, the hotel would require $25 million for refurbishment, which must be completed by 2018. If BSL failed to meet the deadline, the deal would stand cancelled and Sheraton would quit. Also, the government must compensate Starwood on quitting.
Starwood also wanted the rights to choose and hire the construction team.
“Finally, after all these negotiations, Starwood wanted the government to deposit the entire facelift cost in a bank account to show that it (government) has the intention and the financial capability of executing the renovation. Eventually, Starwood’s stubbornness led to its quitting without any positive results,” Rahman said.
He, however, thinks Sheraton made a mistake in quitting the business in Bangladesh.
“Sheraton was making profits here, year after year, even during the global recession, when most of the Sheraton hotels in southeast Asia were incurring losses.”
Sheraton earned revenue of around Tk 102 crore in 2010, up from Tk 80.5 crore a year ago. The hotel made an operating profit of nearly Tk 50 crore, a sharp rise of 47 percent from that of 2009, amid intense competition from its new rivals in the hospitality sector.
Ruposhi Bangla would be run by the same employees of Sheraton. It will be the management operator of the hotel for an interim period until the government finds another world class company to run it.
Rahman, previously the director of sales and marketing of Dhaka Sheraton, is confident about generating revenues and operating profits keeping the hotel as it is.
“After all, it’s us, the Bangladeshi work force, who made the hotel a success. We have the expertise and experience to run a hotel like this efficiently,” he said. “As we have done it before, we will do it again.”
Meanwhile, at a press conference on Saturday, Rahman announced the new journey of Ruposhi Bangla, where Monirul Islam, financial controller, and Shahidus Sadeque, marketing and communication manager of the hotel, were also present.
With The Daily Star input
