Bahrain Bay. Bahrain Bay.

Arabian Business has reported Bahrain’s government needs to implement an action plan in order to help hotels overcome challenges, such as low room occupancy rates and increased overhead costs.

Four and five-star hotels reported an average room occupancy rate of 40% in 2016 while occupancy rate fell from 56% in 2015 to 49% in 2016, experts said.

Bahrain Four Star Hotels Committee chairman Hameed Al Halwachi spoke to Gulf Daily News saying the average 40% room occupancy was “not even close to breaking even” with high overhead costs despite efforts by the Bahrain Tourism and Exhibitions Authority (BTEA) to attract visitors through promotions, roadshows and other campaigns.

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

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

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

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

The Gulf island state aims to attract revenues of US$2.7 billion (BD1billion) per year from tourism by 2020.