March 05, 2011--HOTEL occupancy rates in Bahrain have halved as a result of unrest and protests. Tourism officials say small and medium enterprises (SMEs) and the services industry will be the hardest hit if the situation continues.

Protesters have been occupying the Pearl Roundabout for almost two weeks and frequent pro- and anti-government demonstrations have also caused disruption.

Occupancy rates for March were expected to stand between 75 and 80 per cent, but were now hovering between 20pc and 35pc, said Bahrain Tourism Company chief executive officer and Five Star Hotels executive committee chairman Abdulnabi Daylami.

The drop was mainly due to the postponement of major events such as the Gulf Air Bahrain Grand Prix, conferences and weddings.

Mr Daylami said the financial losses were still being calculated and while jobs were not on the line hotels were exploring ways to reduce costs and remarket themselves to attract business.

"We are the most affected sector because tourism has been affected negatively," he told the GDN.

"We are trying every way and angle to remarket ourselves and to do something to reduce the loss of business, but so far we are doing everything not to affect the jobs of Bahrainis and non-Bahrainis.

"We are working on contingency plans and have already started to look at how to reduce costs that will not affect services."

Mr Daylami said although the hotel industry was suffering there were strong indicators that the international community still had trust in the Bahrain market and economy and was interested in doing business here.

"The trust of the economy hasn't changed in my experience with personal contacts and they know these circumstances will reach an end soon," he said.

Bahrain Chamber of Commerce and Industry (BCCI) board member and BCCI Businesswomen's committee head Afnan Al Zayani said SMEs were the most affected by the current situation and even in the short term many do not have the means to sustain themselves or to access credit.

She said this was particularly worrying because more than 85pc of businesses in the country were SMEs and the majority were owned by Bahrainis.

The country had worked hard to encourage entrepreneurships and this situation was a real setback in creating such a culture, she added.

"Still we don't know what will happen, there is uncertainty and Bahrain's credit ranking has gone down," said Ms Al Zayani, who is also a board member of the Bahrain Businesswomen's Society.

"All the work in the last 10 years has been affected in two weeks and some of the damage is irreversible.

"There is no business without stability, we can't take our economy or country hostage, this is very dangerous and will elevate the tension."

Ms Al Zayani said there was a real possibility that banks and foreign investors would consider relocating their offices outside Bahrain.

She said companies were already reducing staff and sending them on holiday and if things continued it would mean job losses for Bahrainis and a reduction in the amount of premium buildings that were rented and conferences and seminars.

The economy could be further affected if the approval of the government budget continued to be held up, she added.

"The House of Representatives (parliament) is in deadlock and this means the budget is not approved and government spending will be kept at a minimum and the government is the biggest driver of the economy," said Ms Al Zayani.

"Let's pray we come to a solution for all Bahrainis and that's why it is time to start the national dialogue.

"The message from the roundabout has reached loud and clear, we must now move to the next stage and if we don't the businesses will be more affected and everyone will be harmed with job losses, including the people at the roundabout."

Researcher and Jaffari Consultants (Jafcon) chief operating officer Dr Akbar Jaffari said from his analysis of the market most businesses in Bahrain were not being affected by the unrest in the country.

He agreed that in the first few days of the protests there was a considerable decline in business in the retail sector and there had been some absenteeism in factories, but the situation was returning to normal.

The banking industry had not been affected and business was continuing as normal, he added.

"I think the situation is near normal, it's like a demonstration in any advanced economy," Dr Jaffari told the GDN.

"I think the reason some companies may be thinking of relocating has nothing to do with the political situation and they were going away for policy issues."

Dr Jaffari said what had been affected were investments that were on the brink of placement.

He said they had either been withdrawn or frozen until the political situation became clearer.

"There are some events cancelled that are ethically and socially inappropriate to have, for example a wedding party," said Dr Jaffari.

"There may be no problem to have the Formula One or Spring of Culture, but it's an ethical issue when the country is going through intense political difficulties.

"A lot of the loss that people are talking about is not actual loss, it was expected income but of no real book value." [email protected]

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