Postponement of this year's Formula One race has already cost the Gulf Hotels Group in Bahrain around half a million dinars.

And the continuing political unrest in the kingdom has seen the hotel suffer a massive fall in business, according to the company's chairman Farouk Almoayyed.

'The political unrest is hitting us very badly and we are losing money every day,' he said after his company's annual general meeting yesterday.

'But Bahrain and its reputation is far more important than any temporary loss of business.

'If this unrest lasts for a long time it could result in long-term problems and it could be difficult to rebuild people's confidence in the kingdom.'

Chief executive officer Aqeel Raees said that occupancy rates at the hotel were down some 75 per cent on a year ago and that they were now looking at rates of between 20-30 per cent.

'This is a massive problem across the hotel and catering business with some hotels running at 10 per cent of their level of business from last year,' he said.

'We are losing conferences and other business to Dubai and that is something that could continue and could be difficult to reverse if the current situation continues.

'It is not just a problem for us but for Bahrain as a whole and what is happening at the moment is damaging the entire Bahrain economy.'

He said that while, to date, the company had not had to lay off any staff it had sent some staff home on leave but that elsewhere in the industry people had been losing jobs.

'We have closed some floors to reduce costs and some of our restaurants are only open at week-ends,' he said.

'If this situation is not resolved then we will see job losses across the economy. In our industry we are suffering big time. Foreign governments are telling their citizens not to come to Bahrain and we are also losing business from across the causeway.'

He added that while the company had managed to post record profit last year in spite of difficult financial conditions globally, it was unlikely that this would be the news in a years time because of the disruption.

The company made a net profit of BD10.042 million ($26.5 million) for 2010, the highest since the company's inception in 1967.

The figure represented a growth in net profit of BD925,309 or 10.15 per cent compared to 2009.

At the annual general meeting yesterday, the shareholders approved a dividend payout of 30 fils per share totalling BD4.5 and a share bonus at 10 per cent.

'It has been an outstanding year for Gulf Hotels Group,' said Almoayyed.

'Trading results have been the best on record'.

He said 2010 had been a difficult year following the negative effects of the 2009 global financial crisis and that the business climate has been extremely challenging with markets somewhat static.

He recognised that to achieve these results in a very challenging market required effective planning and execution by the executive management.

Almoayyed added that the completion of the multi-storey car park had given the hotel an additional 600 parking bays, alleviating parking problems at peak times and enabling the hotel to improve its customer service.

During February 2011 the group made an additional investment of 5,000,000 shares in Bahrain Family Leisure Company increasing the shareholding to 28.05 per cent from 14.17 per cent.-TradeArabia News Service