Hard times hit hotels in Davao City

DAVAO CITY — Hard times have indeed hit hotels in this city since last year when two major hotels closed down due to low occupancy rates and high operational costs.

The closures resulted from the Asian economic crisis, the hostilities between government and Moro rebel forces and the spate of kidnappings by the extremist Abu Sayyaf, which slowed down tourist arrivals and economic activities in this part of the country.

This economic downturn triggered a price war among hotels here.

Last week, another establishment, the Durian Hotel, ceased operations after Metrobank foreclosed its property because of unpaid obligations.

Earlier, the P3-billion Samal Island Casino Resort, owned by Malaysian conglomerate Ekran Berhad, was forced to shut down after suffering low occupancy rates since it opened in 1997.

The Davao Insular Hotel, considered a city landmark, also had to cease operations after its owner, the Wellex Group of Companies of plastics king William Gatchalian, also incurred heavy losses.

Two other city hotels have reportedly severed ties with international management firms to cut down on operational costs.

The former Mercure Grand Hotel, now Davao Regal Hotel, gave up its affiliation with an international hotel management group after its income could not compensate for the continued payment of management fees.

The same was true for the Royal Mandaya Hotel, which, until two weeks ago, was being run by the Barcelo Hotel Group of Spain.