Industry experts, Rupprecht Queitsch, CEO, INHOCO Group; Naim Maadad, CEO, Gates Hospitality; Russel Sharpe, COO, Citymax Hotels; Rabih Feghali, director at Roya International Hospitality and Leisure Consultants and Torsten Obermann, area GM, JA Resorts and Hotels gathered on a panel session at this year’s GM Leaders conference 2016 to discuss how and when, if ever, hoteliers should drop rates.
Kicking off the session, Queitsch said: “The city is growing faster in keys than it is in numbers. There is more new inventory coming in at the moment, especially in the UAE – Dubai in particular, than the demand is growing – you have to be able to find a way survive, but dropping rates isn’t the main answer. We will see rates begin to stabilise by 2018 and things will pique up by 2019.”
COO of Citymax, Sharpe added: “In some sense or another we’ve all been through a little bit of a ‘rate war’, and what helps adjust planning is feasibility studies. These studies need to happen more frequently, because lots of feasibility studies were conducted a few years ago and aren’t reflective of the current economic climate. At the time of these studies, owners saw Dubai as a hotbed for investment, and so that is why we see so many new hotels popping up and we need to analyse the market more frequently. There is now a we reduction in room rates, this is pushing down the overall revenue a hotel makes.”
Touching upon changing rates and expectations, CEO Gates Hospitality, Madaad, added: “It is our responsibility as industry leaders to benchmark globally and regionally, there is nothing wrong with 75% occupancy levels, so if the rates are high and our hotels are partially full, we are still driving in revenue. Hotels in Europe would love to have this kind of investment.”
Commenting on how the influx of new mid-market hotels will help even out rates, Sharpe said: “With the introduction of serviced apartments and mid-scale hotels in Dubai, we are seeing a new wave of travellers that couldn’t afford to come here before. This essentially means that rates now have the chance to stabalise, there is no need for a 5-star hotel to be charging 3-star rates.”
Highlighting the need to tap into local markets, director at Roya International, Feghali, said: “Specifically in Dubai we depend on local travellers, not just business travellers or holidaymakers from China, Russia and Europe. There is a lot happening in terms of how the emirate is positioning itself to engage with GCC travellers and capture this market.”
Area GM for JA Hotels and Resorts, Torsten concluded: “I have noticed over the last few years guests are becoming more price concious, they are looking for special deals, but I don’t think that we have to offer the lowest rate to get the guests booking with us. What is important is that we offer value. We must get the basics right, and we need to offer the services that guests are expecting, once you build trust with a guest, they will return no matter what the rate.”