GEMS chief dismisses greed claims amid fees hike row

The UAE’s largest private education provider has hit back at accusations of greed following its decision in July to hike fees across its Dubai schools by the maximum allowed for the next term.

Dino Varkey, senior director of business operations at GEMS, said the chain had been absorbing a 30 percent disparity in its Dubai schools between running costs and fees since 2005, and that the current price hikes were not large enough to close the gap.

Schools were previously allowed to raise fees by 20 percent every three years.

He said: “People seem to forget that education is one of two price-regulated industries in the UAE. For the last four to five years we’ve been capped on our price, while all of our costs were allowed to rise unchecked. None were subsidised.

“Average operating costs across the board at five Dubai schools, have risen 57 percent since 2005. Fee increases averaged 27 percent. That’s a 30 percent disparity. We don’t have the flexibility to be sensitive to a downturn.”

Staff costs alone had risen 75 percent during the same period, with rents increasing by 31 percent, he added.

GEMS operates 26 schools in the UAE, 18 of which are in Dubai.

The decision by GEMS to accept the maximum fee hike allowed by the Knowledge and Human Development Authority (KHDA), the government agency that regulates Dubai schools, sparked protests from some parents who accused the group of turning a blind eye to the credit crunch.

Parents who contacted Arabian Business said the fee increases, which ranged between nine and 15 percent, risked pricing cash-strapped families out of the education market.

One parent, whose two children attend Dubai American Academy, said: “In these difficult economic times, to increase fees by the maximum possible is insensitive to say the least. Everywhere else costs are getting cheaper. Rents are down and salaries are frozen, so there is no justification for this.”

According to the parent, who asked not to be named, fees at the school have increased by 40 percent since 2005, with teenage students now facing annual fees of AED65,000 ($17,664).

However, Varkey denied that school rents are decreasing and said that, even with the price increase, the network would be playing catch-up on its costs.

“[Residential] decreases have no correlation to commercial rents,” he said. “Rents are not coming down for schools.”

He added: “Look, if we had been allowed to charge in increments each year, there wouldn’t be this dramatic shortfall now. When we started lobbying the government five years ago, the level of increase might only have been 20 percent. But because the decision has been left pending… the size of the shortfall is now anything between 90 and 100 percent.”

Read the full interview with Dino Varkey in Sunday's issue of Arabian Business.

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