Hotel and Tourism Business in Bangladesh
In recent years, the hotel industry has been at the center of Bangladesh’s economic growth, providing 9.3% of the country’s overall GDP. As a result of the government’s measures to facilitate travel to the country’s most popular tourist destinations, such as the Dhaka-Chattogram Highway, Padma breeze, etc., internal travel and foreign tourist arrivals in Bangladesh have increased significantly. As a result, hotel construction has increased in the key tourist destinations to accommodate the rising demand. In addition, the proliferation of affordable and opulent resorts has provided the much-needed boost to the national economy in order to meet the target of middle-income status by 2021.
How to Establish a Hotel and Tourism Enterprise in Bangladesh:
As we can see in the example of Thailand and Nepal in South-East Asia, tourism may be a significant, if not the largest, sector that drives economic growth. Tourism led to the creation of 319 million employment, or one in ten of all occupations globally, and has been responsible for one in five of all new jobs in the world over the past five years, according to a research published by The World Travel and Tourism Council in 2019. The Sundarban, the world’s largest mangrove forest in the south of the country, and the world’s longest natural beach at Cox,s Bazaar are just a couple of the numerous noteworthy tourist attractions in Bangladesh. Additionally, the northeastern region of the country contains Sylhet with its tea plantations atop hills.
Travelling and tourism sites are the most popular tourist destinations in the north of the country. Foreign investments in the hotel include the international hotel chains Marriott, Hilton, Novotel, Sheraton, InterContinental Holiday Inn, Marriott Courtyard, Radisson Blue, and Westin. Local investors, such as DuSai Resort & Spa in Maulvi Bazar, The Peninsula Chittagong, Hotel Valley Garden and Nazimgarh Garden Resort in Sylhet, Long Beach Suites Dhaka, Six Seasons Hotel in Dhaka, Long Beach Hotel at Cox Bazar, and Grand Sultan Tea Resort & Golf in Maulvi Bazar, also play a significant role. Bangladesh is becoming a hospitality industry success story.
The Government thinks that the implementation of hassle-free on-arrival visa services will simplify the visa system for foreign citizens, particularly those of Bangladeshi descent, and thereby contribute to the sector’s growth. As international investments and donations stream into Bangladesh’s economy, MNC and NGO executives are more likely to travel there. Recent growth in the number of resorts such as Bhawal Resort, Sara Resort, and The Base Camp is in high demand amongst people who like to travel just outside of Dhaka, to places such as Gazipur, Sylhet, etc., and the quality of the service provided in these places is quite high, but is likely to take a toll on the wallets of the tourists. Nonetheless, these accommodations are booked solid for the majority of the year, indicating that the discretionary income of the general population is on the rise. (Hotel and Tourism Business in Bangladesh)
The travel agency’s role in tourism is essentially that of a “nation’s image manufacturer,” as it is the travel agency’s credit that reveals the attractions and marvels of a country to travelers in a profitable manner. Typically, a travel agency operates as an agent and offers travel-related items and services on behalf of the service provider, such as airlines and hotels. Travel agents create international and domestic travel packages to the demands of their clients so they can go on their tourist experience. They offer a vast array of travel destination alternatives, including tour bookings, flight reservations, airline tickets, cruise line service, railway service, lodging bookings, vehicle rental, visa processing services, and bespoke vacation packages for small groups or couples, etc (for Hotel and Tourism Business in Bangladesh).
Procedures for Obtaining a License and Registering for Hotel and Tourism Business in Bangladesh
The hospitality industry and tourism sector are linked; the growth of the hospitality industry is based on travel and tourism, and the success of the tourism sector depends on customer satisfaction, recreational amenities, and the quality of service offered by the hospitality industry. All of these amenities are provided in the hospitality industry, which caters to tourists’ needs for lodging, food and beverages, and entertainment facilities, etc. As a result, several tourism businesses began collaborating with the hospitality industry in order to include hospitality services in their tour packages. Whoever wishes to enter the hospitality and tourism industries must meet registration and licensing requirements specific to each sector. The registration and licensing procedures for each industry will be covered briefly. In accordance with Bangladeshi law, the first stage in launching a business is to establish a legal corporation for doing business in the hotel or tourism industries. The available alternatives are limited liability company, sole proprietorship, and partnership, but only limited liability company allows for foreign investment.
Hotel and Tourism Business in Bangladesh and incorporation in Bangladesh:
The process of incorporating a company begins with the acquisition of a Name Clearance certificate from the Company House, Registrar of Joint Stock and Companies (RJSC), as well as the compilation of the Articles and Memorandum of Association of the company, as well as Forms XII and IX. For Hotel and Tourism Business in Bangladesh, The executed MOA and AOA, along with the aforementioned paperwork and costs, must be delivered to the RJSC. The RJSC will provide a certificate of incorporation, together with RJSC-certified memorandum and articles of association, confirming that the business has been lawfully incorporated, providing all documents are correct and authentic. If a foreign shareholder is involved, a bank account must be formed to receive the foreign shareholder’s capital investment prior to submitting the documentation to the RJSC.
Partnership and Hotel and Tourism Business in Bangladesh:
By executing a partnership deed and registering the partnership with the Registrar of Joint Stock Companies and Firms, a partnership firm can be formed (RJSC).
Single Ownership for Hotel and Tourism Business in Bangladesh –
This sort of company is formed by a single individual and has no partners. To conduct business through such an entity, one must get a business license from the applicable city corporation. A foreigner is unable to operate a sole proprietorship.
After forming the organization, the next step would be to get the different operational licenses required by the hotel industry and the travel agency. If an entrepreneur wishes to establish any Hotels of three, four and five-star categories, then he shall need to apply for a hotel license from Ministry of Civil Aviation and Tourism (MoCAT) or if he wishes to set up any Hotels of one and two-star categories, then shall have to apply for a hotel license from District Commissioner (DC) with the relevant documents and processing fees.
Alternatively, if an entrepreneur wishes to incorporate a travel agency, he or she must obtain a license to operate a travel agent business from the Ministry of Civil Aviation and Tourism for Hotel and Tourism Business in Bangladesh. The other licenses required, even though not mandatory, for obtaining for business would be Association of Travel Agents of Bangladesh (ATAB) license and Association of International Travel Agents (IATA) license.
The other perquisite licenses which needs to be obtained for both the Hospitality Industry and the Travel Agency shall be TIN certificate and the Value Added Tax (VAT) Certificate which needs to be attained from the online portal of the National Board of Revenue (NBR) and the trade license which needs to be obtained from the respective city corporation/local government office (Hotel and Tourism Business in Bangladesh).
LEGAL ISSUES for Hotel and Tourism Business in Bangladesh
The entire process of incorporation of an entity for a hotel industry or a travel agency gives rises to a lot of legal issues which needs to be carefully addressed in order to avoid legal implications. While incorporating a company/sole proprietorship or partnership, it is essential that all the original signed documents along the relevant forms are to be submitted at the relevant government authority or else the application for incorporation of the entity shall fail without a doubt. The annual filing requirements, are declared mandate for the entities such has renewing the trade license at the respective city corporation.
Essentially, hospitality and tourism even though interlinked are diverse from each other in terms of regulatory governance. Any entrepreneur willing to invest and run a hotel business must comply with the Bangladesh Hotel and Restaurant Act of 2014 and the Bangladesh Hotel and Restaurant Rules 2016.
Legal issues also arise upon application of the hospitality laws on the hotel owners of Bangladesh. Hotel owner must ensure that he chooses a commercial establishment rather than a residential establishment for the setup of the hotel which must consist of at least 10 bed rooms for the guest to stay there with or without food and other services in exchange of money and irrespective of the fact that the name of the entity, such as motel, guest house, resort etc. It is obligatory on the hotel owner to attain a registration certificate and license in order to run the hotel business and a license should be obtained as soon as possible within the first 2 years from the date of issue of the registration certificate.
A register inclusive of all the necessary information of a guest must be maintained by every hotel in Bangladesh as mandatory compliance requirement imposed by the the Bangladesh Hotel and Restaurant Rules 2016. The register shall comprise the following information of the guest which includes time of arrival and departure of the guest, phone number, current and permanent address, National Id or passport number or any other identification car number. In case of foreign guest, the hotel shall keep a copy of the passport pages where the name, address and visa of such guest is present.
The penalties imposed on the hotel industry are pretty strict and as such the hotel owner must at all times be alert before violating any law of the hospitality industry. The punishment applicable will be for a period of 6 months’ simple imprisonment or a fine not more than BDT 2 lakhs or both in case any person or owner breaches any law under the Bangladesh Hotel and Restaurant Act of 2014.
Travel agency owners for Hotel and Tourism Business in Bangladesh:
Also, travel agencies owners must ensure adherence to a Bangladesh Travel Agency (Registration and Control) Act, 2013 Bangladesh Travel Agency (Registration and Control) Rules, 2014 while conducting travel agent’s business in Bangladesh. Obviously, the license must be obtained from the registration authority, the Ministry of Civil Aviation and Tourism and it is an obligatory requirement for the travel agency to retain the travel agency licensing certificate safely and conspicuously at the business premises or office of the travel agent. Additionally, legal compliances in relation to promptly providing information in regards to the business affairs of the travel agency is mandatory on the travel agent upon instruction of the government or the registration authority. Non-compliance with any of the laws and rules related to Travel Agency shall adversely affect the owner and he has to face serious legal implications amounting to not more than 6 months imprisonment or fine not exceeding BDT 50,000.
Evidently, both the hospitality industry as well as the tourism industry is labour intensive and huge amount of skilled and unskilled labours are being employed in these industries and as such quite naturally it involves legal issues related to the working hours, overtime pay, leaves and termination benefits of employees. Other than that, every employee employed at these industries regardless of their nationality must have an appointment letter executed with the entity. Many foreign employees are employed at the hotel industry eg consultants, chefs, waiters, bar tenders and in such cases they must be employed as per the labour and the Immigration laws of Bangladesh.
The entities in this sector shall also have to be very compliant with the Consumer Rights Protection Act 2009 as any valid complain brings strict consequences as per the said Act. The purpose of the Act is to protect the consumers from any violation of their rights and to monitor the standard of the goods and services which are to be provided. As this is an important industry for the local economy, any valid complaint from the respective consumers are dealt diligently and if proven strict measures are taken by the authority as per the applicable laws.
Furthermore, as per the Bangladesh Standards and Testing Institution (BSTI) regulations there are 71 Agricultural and Food Products which are under the compulsory Certification Marks (CM) scheme of BSTI which in other words means that marketing of any of these items needs conformity certificate of Bangladesh Standard from the BSTI. There are imported 23 Food Products required mandatory certification before customs clearance. If any hotels serve any of the products from these two lists, to its customers, it must check whether the products have the Certification Marks on it.
INTRODUCTION OF Tahmidur Rahman Remura Wahid TRW AND ITS SERVICES
Tahmidur Rahman Remura Wahid TRW Associates is a renowned law firm in Bangladesh which endows a widespread of legal services for both domestic and international clients. It is full serviced law firm led by a dedicated team of professionals collaborating together to provide the best legal solution for their clients. Tahmidur Rahman Remura Wahid TRW has earned the status of one of the leading law firms in Bangladesh due to their several years of experience, skill and knowledge in key practice areas.
Tahmidur Rahman Remura Wahid TRW, since its inception has created a trustworthy relationship with each and every one of its clients. To provide quality legal services to the Clients is the motto of the firm. Tahmidur Rahman Remura Wahid TRW has assisted Hotel owners as well as Travel Agency owners in the entire procedure of the incorporation of the entity, obtaining the relevant licenses and approvals on behalf of the client from the relevant government authorities.
Many a times, anomalies are found in contracts/service contracts executed between the hotel industries and the travel agencies regarding the referral services to be provided by the travel agencies to the hotels in exchange of commission. Tahmidur Rahman Remura Wahid TRW supports entities in reviewing and drafting these contracts/service agreements according to the needs of the clients (Hotel and Tourism Business in Bangladesh).
In relation to the immigration services required for foreign employees employed by the entities, Tahmidur Rahman Remura Wahid TRW’s immigration law team can assist the entity to obtain the E-visa (employment visa) recommendation letter and work permit on behalf of the foreign employee and can also assist to obtain the extension of the work permit and the E visa for the foreign employee. The service shall include drafting all the necessary application and documents and collecting the relevant documents from the foreign employee and the entity; and submitting the same to the relevant government authorities and also liaise with them to obtain the necessary work permit and visa extension.
The legal team of Tahmidur Rahman Remura Wahid TRW, due to their years of experience in employment law, has attained proficiency in drafting and reviewing employment agreements/appointment letters of employees for such entities. Their experience in labour matters is exceptional. They have assisted clients via legal opinion on the available termination options, resignation procedure and dismissal procedure etc .
Tahmidur Rahman Remura Wahid TRW also provides legal opinion to the clients, in relation to implication of laws and its impact in various matters which enables them to take informative business steps by considering the legal aspect. Additionally, Tahmidur Rahman Remura Wahid TRW Associates also provides due diligence report to the interested clients for their entities which flags out all the legal requirements which are required to be followed and also non – compliances, if any, which needs to be fixed.
Furthermore, Tahmidur Rahman Remura Wahid TRW Associates has a very strong litigation team which assist and represent the clients to defend/file disputes at court or tribunals in relation to all types of litigation.
Taxation for Hotel and Tourism Business in Bangladesh
General rate of tax is 32.5% currently in the laws of Bangladesh. Several exemptions are in place for constructing a physical undertaking of a tourist industry. Nominal requirements for a limited company formed locally includes a number of reporting to be done to NBR, such as: Opening a TIN, Monthly Tax deduction statement, Half Yearly Withholding Tax statement, Yearly statement related to tax return submission of its employees, Yearly statement related to salary disbursed from company to its employees, Quarterly Advance tax deposition, Yearly Tax return submission, attending appeal/hearing session as required on behalf of the company, Monthly VAT return etc. Tahmidur Rahman Remura Wahid TRW can advise and assist to satisfy all regulatory compliances to enable the company to run smooth and hassle free.
Infrastructure of Hotel and Tourism Business in Bangladesh:
As we continue to improve infrastructure services, bring down the expensive hotel rates and increase availability of healthy and affordable food at the tourist hubs of the country like Cox’s Bazar, St. Martin Island, ancient Buddhist temples in the north while focusing on sufficient marketing policies are in place – the next 5 to 10 years holds huge prospects for this sector. Yet there is still scope for accommodation facilities to improve in all the above stated places and even more. Currently there are no standard educational institutions involved in the training of management personnel for all the tourist attractions and hotel all over the country – a sector which can use an injection of institutions which would be able to do so.
The Hotel and Tourism industry in Bangladesh has a huge potential as the demand of the local market is continuously growing. The continuous urge to experiment with different cuisines increasing the demand of restaurants.
To become a part of this industry there are various options of entities, Sole Proprietorship, Partnership Business and Private Limited Company are available for investors. To create a business-friendly environment, BIDA has now open up a one stop services center for investors where all the services from incorporation of entities to post incorporation licenses are available
Tahmidur Rahman Remura Wahid TRW Associates as a full-service law firm provides all sort of legal and financial assistance starting from registering entities like Hotel and Tourism Business in Bangladesh to obtaining required licenses; drafting agreements and notices to providing annual compliances and litigation services. Tahmidur Rahman Remura Wahid TRW Associates is enriched with experienced Barristers and Advocates who have expertise in different legal sectors which enables to provide the required services with high standard and the clients can obtain all the essential and ancillary legal services under one umbrella. Hence the law firm is considered as one of the pioneers when it comes to Hotel and Tourism Business in Bangladesh.
Are you planning to do Hotel and Tourism Business in Bangladesh?
The legal team of Tahmidur Rahman, The Law Firm in Bangladesh: TRW, The Law Firm in Bangladesh are highly experienced in providing all kinds of services related to forming and incorporating a Hotel and Tourism Business in Bangladesh. For queries or legal assistance, please reach us at:
E-mail: [email protected]
Phone: +8801847220062 or +8801779127165
Address: House 410, Road 29, Mohakhali DOHS