Slow hotel, restaurant business in H2, FY '23 erodes GDP growth

Business of hotels and restaurants in Bangladesh contracted in the second half (H2) of fiscal year (FY) 2022-23, affecting the country's overall economic growth, as reflected in the quarterly GDP estimates by the Bangladesh Bureau of Statistics (BBS).
The value addition from the 'accommodation and food services', which was earlier termed as hotels and restaurants services, dropped 7.92 per cent in January-March quarter (Q3) and nearly 6.0 per cent in April-June quarter (Q4) of the last FY.
Consequently, the GDP growth at constant prices stood at 2.04 per cent in Q3 and 5.78 per cent in Q4, according to the BBS data released last week.
People at the hotels and restaurants business, one of the key sectors of the economy, said the turnover dropped significantly during the period apparently due to higher prices of food items served in the restaurants.
They said the prices are higher as the raw materials like flour, sugar, onion, and other kitchen items have increased substantially.
Bangladesh's imports had been expensive since the beginning of the Russia-Ukraine war as the volatility in the forex market was continuing.
They said that the sales have been sliding since the rising trend of wheat prices.
"Actually, the prices of all kitchen items remained high for a long time in the local market, leading to higher production costs of their products," Syed Mohammad Andalib, joint secretary general of Bangladesh Restaurant Owners Association, told the FE.
He said the prices of poultry, eggs and beef remained high for a long time. The prices of beef, however, dropped over the past few days in the city and other parts of the country.
He said the customers avoid eating out during an inflationary situation.
"The customers enjoy food during the economic boom," said Mr Andalib, who owns a restaurant in the city's Baridhara area.
The GDP category takes sectors like earnings from restaurants and hotel rent. This excludes rents from houses that go to real estate and others.
The owners of hotels and resorts said that they have been getting fewer customers in recent times.
Mr. Sharek Ahmed, a member of Bangladesh Hotel and Guest House Owners Association, said that their turnover still remained poor. "I'm not an economist, but there are many reasons like exchange rate of US dollar, inflation and political unrest," he added.
The contribution of accommodation and food services to GDP stood at Tk 126.02 billion in the Q4 and was Tk 135.16 billion in Q3 of FY 2022-23, when total contribution was Tk 510.53 billion.

[email protected]