F1 decision hits Bahrain hotels

Bahrain's tourism industry to lose out on up to US $600 million as its Grand Prix is postponed indefinitely - with video.

The Bahrain Formula One Grand Prix, which was to have taken place from March 11 to 13, has been postponed.

Bahrain hotels and businesses could lose out on up to US$600 million (Dh2.2 billion) in revenue after the kingdom postponed its Formula One Grand Prix.

"We are looking at five days where normally we would have 100 per cent occupancy for all the hotels," said Michel Mandrea, the general manager of the Golden Tulip hotel in Bahrain.

"Now we have to start looking at what we are going to do about it."

Almost 100,000 spectators showed up to watch the 2008 race, according to a study commissioned by the Bahrain government last year. The race generated about $600m for the economy, including $116.8m of income from visitor expenditure on accommodation, food and beverage outlets, retail markets and travel services.

The study also found the "vast majority" of the income from the Grand Prix was generated by travelling fans. Twenty-two per cent came from overseas, with most travelling from the UK, followed by visitors from the Middle East region. In the process, the race created about 600 jobs.

A survey in 2008 of race fans from overseas found 49 per cent travelled with Bahrain's Gulf Air, while 6 per cent flew with British Airways.

"It's the flagship event," said Simon Williams, the chief economist for the Mena region at HSBC.. "Its success is what helped put Bahrain on the map. The events of the last few weeks will have an immediate negative impact on the Bahraini economy."

The most immediate impact is being felt by Bahrain's hotels, as guests cancelled trips.

"We already had 100 per cent bookings," said AV Abdul Nazir, the general manager of the Atlas Hotel. "Most have cancelled now. They were coming from Turkey, Finland, New Zealand, mostly Europe and a few from the Far East."

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Mr Nazir said that last year the event generated about 15,000 Bahraini dinars (Dh146,121) for the hotel.

"It was all pre-planned and we didn't take any normal bookings," he said. "Prices are high during this season. We kept the rooms from March 8 to 15 for the F1 only and they were all sold out."

The race made $13.8 million in ticket sales and a further $36.7m in expenditure by fans on merchandise, food and beverages at the Bahrain International Circuit, the study showed.

Mr Mandrea said bookings were down 50 per cent and occupancy levels were at 30 per cent.

"This is the best week that we have in Bahrain in terms of occupancy and rates," he said, adding that his hotel was charging about 140 dinar a room for the race period, about double its normal rates. Mr Mandrea said the hotel was refunding money on any cancellations.

The Grand Prix also generates $7.7m through television rights, commissions, facility rentals, sponsorships and catering commissions.

Money has already been spent on marketing this year's Bahrain event and other aspects of the race, but it is not clear how much has been lost as a result of the cancellation.

It has been suggested the race may be held later in the year, which would present hotels with an opportunity to recoup losses.

But some hoteliers were sceptical.

"I'm not sure," said Mr Mandrea. "It's really just speculation. We have to keep our ears to the ground and see what is going to happen but I don't think there will be a final decision until everything else has gone quiet."