The general managers’ debate

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Michael Nugent, General manager, Mövenpick Hotel & Residence Bur Dubai.

Dubai's GMs from the Creek to the Marina gathered at The Radisson Blu Residence, Dubai Marina, to share strategies and concerns amid the economic crisis. Business may be down, but spirits certainly are not, with staff selection, development and retention the current buzz words.

The economic downturn has had a major impact on how hotels do business. What do you think has been the main challenge and how are you tackling this?

Michael Nugent: No matter how efficient you are, fat builds up. In every business, in every operation, fat will build up in the good times; and then when the tougher times come the fat goes and you concentrate on your core and efficiencies improve. There is no doubt about that.

I think the most difficult thing we face is getting the efficiency matched with the service because obviously the guest paying AED 1000 (US $273) last year is paying AED 650 ($177) this year, but doesn't expect any less service or any less quality, so it's getting that balance and making sure the customer is not seeing any effect - in other words, do it back of house. And there are ways and means of doing it that the customer will never be aware of, and that's what we've done, you look at all your housing costs, operation costs and transportation etc.

We've been fortunate in that we have openings in the region and we've been able to relocate a number of people into new positions. Nobody's been made redundant; we have reduced our head count, but those people have gone on to new openings. We have around five to six openings coming up and again some of my team will end up being promoted into those developments.

It's not been an easy year, but it could have been a lot worse. I've been through recessions in the UK, which have been draconian in what we've had to do, so this hasn't really been that tough. It just means the owners are making less bottom line.

Heinz Grub: I believe the thing that we did absolutely right was to go back to our bases. I have worked in Dubai during the good times; hotels filled whether you wanted them to or not - now you really have to go and sell.

If you had a good regular customer base and if you have been customer focused from a sales point of view, and from an operational angle, you could weather the storm much easier by all means - fortunately we have a very good regular customer base and we have been pretty efficient in how we have operated.

I think a lot of people talked about cost cutting; yes you have to be very careful what you do with your expenses, but I don't like that word cutting. I think you have to be much more conscientious towards how you spend your money, but if you start cutting, the customer will know about it. Yes, you become more efficient, you become more effective in what you do, you have to, and I think the most important thing is that you have a very good channel of communication towards your guests. Don't let the guest come to you, you go out to the guest, be open about what you do and how you go about it.

What has been the impact of the downturn on newer hotels in Dubai?

Cornelia Erhardt: I would say it has been quite challenging, especially when we reached December last year because when we opened it was great - if I look back to October/November it was just wonderful. We had a great occupancy from the very beginning with a great rate that I could never have believed in Europe. Then of course the disaster started,  when I say disaster, for me it was like falling into a hole because suddenly there was a price war going on, we didn't know which way to go; should we keep the rate and add value to the rate, but it was not possible.

It was just simply very difficult to get volume in because guests are shopping on the internet.

We discussed how can we set the rate at a level so we are not struggling in two years' time - if we want to reach a certain level again it's much more difficult to go up in rate. Anyway, we monitored the pulse of the market and decided to go with it, but our recruitment and cost management has also been very important.

I feel that when you are a GM, it doesn't matter if you are now having the best revPAR or the best market share, I think you should always control costs because it always gets more revenue into the bottom line, so no matter how good times are, I never over staff. Whatever is necessary will be recruited at that particular time, therefore, I did not come into that situation where I had to terminate people and ask them to leave.

At the same time, you maybe look at different models and how to run your organisation. In Dubai you have outsource companies (such as security, housekeeping, lifeguards) which can help you during the peak season and that is the way that I started running the business.

Oliver Key: I agree business has certainly taken a dip, we have seen that in The Address Downtown [Burj Dubai], but new hotels are opening and are doing quite well. That's been a good sign; we're fairly encouraged by the levels of business still coming to Dubai. So we're still excited about the opening but have we changed strategies? Yes and no.

We've certainly got a little bit leaner on paper but we were fortunate in that we hadn't hired a bunch of people already so we were able to do that quite effectively. We have certainly not changed our philosophy in terms of what our product or service offering will be at all, we just know that we are working within slightly different parameters. But for anyone who has worked in Europe or the US as we all have, they're parameters that you get used to working in anyway so perhaps it's more normal coming into the marketplace.

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