The issue of UAE hotels dropping rates could be due to a combination of a reactive response to market forces, lack of understanding of the hotel’s overall strategy in relation to profitability and the absence of a proper revenue management strategy, so hoteliers agreed during a panel discussion entitled “War Games – Fighting the Rate War” at the Hotelier Middle East Great GM Debate 2017.
Moderating the panel was TRI associate director Christopher Hewett, with the following hoteliers participating in the discussion: Rotana Hotel Management Corporation area vice president, Dubai and Northern Emirates David Prince; Southern Sun Abu Dhabi general manager Pierre Delfau; Radisson Blu Hotels, Dubai Waterfront & Dubai Canal Views cluster general manager David Allan; and Frasers Hospitality area manager Middle East & Africa Cyril Warsono.
Prince kicked off the discussion by commenting that the issue of hotels dumping rates occurs as a combination of internal pricing decisions being made as a reaction to what is perceived to be prevailing market conditions. “It’s a self-inflicted wound in many cases,” he said.
He reminded the panel that the first four months of 2017 actually saw average hotel occupancies grow by 2.6%.
We need to distinguish between ‘real risk’ as seen during the summer – when occupancies were very much under pressure – and ‘perceived risk’, which was the case during the first four months of the year when people were believing bad news and making decisions based on that which they thought was going to be the market,” he said, adding that he personally “pushed” for his GMs not to drop their pricing with the result that during those first four months, RevPAR within his cluster of hotels “actually grew”.
While he admitted that his team was “nervous” about the strategy, he stood his ground. “As with anything, once you show that it works, then people get more engaged and they follow more willingly because they see the benefits.”
