Bahrain
Kuwait
Oman
Qatar
Saudi Arabia
UAE
Print
Email
Discuss this article (11 Comments)UAE hotel rates will never return to 2008 peaks - Rezidor
by This email address is being protected from spam bots, you need Javascript enabled to view it on Wednesday, 07 October 2009
ROOM RATES: The CEO of Rezidor, which manages Radisson SAS hotels, says room rates will never return to their 2008 peaks. (Getty Images)
UAE hotel room rates will probably never return to the peak they reached during the country’s five year boom, the CEO of a leading hotel chain has said.
Kurt Ritter, president and CEO of The Rezidor Hotel Group, the manager of Radisson SAS and Missoni hotels, told Arabian Business that it would be “wishful thinking” on hoteliers' behalf if rates ever increased to the highs they reached in 2008.
“To go back to what it was [would be] wishful thinking,” he said. “To get rates back up is very tedious and takes a long time; you have to build it up. Once people get used to the rate they don’t want to pay any more.”
Ritter said the group had been forced to drop its rates by an average of 20 percent since the downturn.
In October last year, Dubai’s revenue per available room (RevPAR - the hospitality industry’s benchmarking term) reached a record high of $350, according to STR Global.
Ritter said RevPAR had dropped 35 percent in Dubai amid the global economic downturn. Despite the decline, he said the region had fared better than the group’s other core markets: “It’s still a very good RevPAR rate compared to any place in Europe or across the world.”
Many western hotels chains are eying expansion across the MENA region in a bid to recoup losses from their home markets which have been hit badly by the economic downturn.
Ritter said he sees huge potential for the group’s three star branded hotels to grow in the region. “Absolutely [there is room for midmarket hotel growth]. It will come; it’s just a matter of time. It will follow Europe like Europe followed the US.
This year Rezidor, a former unit of the Scandinavian airline SAS, has opened five hotels in the MENA region and plans to open a further three by year end. In July, Ritter said he expected 84 percent of the group’s growth to come from Eastern Europe, Middle East and Africa while 75 percent of its total pipeline would be in emerging markets.
The group will also look at converting existing hotels in the region, he said. “Unbranded hotels will become branded. You can really see in downturns that the unbranded ones suffer more than branded ones.”
Rezidor opened its first hotel in the Middle East in 1979 and today has 22 hotels operating or under construction in the region.
READERS' COMMENTS
Disclaimer: The views expressed here by our readers are not necessarily shared by ArabianBusiness.com or its employees.
Value for Money ? CSR ? In Dubai ? You must be kidding !
Posted by cool dude, San Francisco, Stars and Stripes forever on Sunday 11 October 2009 at 13:28 UAE time
Mr. Tedesco has hit the nail right on the head. Value for money and CSR are things that simply do not exist in the Dubai hotel owner / management's mind. Agree that there is no justification for hotels in Dubai to charge their exorbitant room rates but unfortunately, rates are merely a function of supply and demand and not dictated by or justified on the basis of operating cost. I for one will not be surprised if the major hotel chains agree to regulate the supply in the years ahead to prop up room rates in Dubai as unlike in other places, these chains freely function like cartels in the Middle East in the absence of laws which restrict competition / formation of monopolies. It is indeed a great pity that most of the staff working in the opulent surroundings of these fancy hotels in Dubai spend their off duty hours in wretched conditions, are often away from their family and friends for long periods and work long hours for a pittance. Even a small part of the so called 10 pct service charge does not find its way into their pockets. It is therefore hardly any surprise that one does not see too many young Emiratis pursuing careers in the hospitality industry and instead they focus on jobs in the govt. or other more lucrative careers .
Posted by cool dude, San Francisco, Stars and Stripes forever on Sunday 11 October 2009 at 13:28 UAE time
Mr. Tedesco has hit the nail right on the head. Value for money and CSR are things that simply do not exist in the Dubai hotel owner / management's mind. Agree that there is no justification for hotels in Dubai to charge their exorbitant room rates but unfortunately, rates are merely a function of supply and demand and not dictated by or justified on the basis of operating cost. I for one will not be surprised if the major hotel chains agree to regulate the supply in the years ahead to prop up room rates in Dubai as unlike in other places, these chains freely function like cartels in the Middle East in the absence of laws which restrict competition / formation of monopolies. It is indeed a great pity that most of the staff working in the opulent surroundings of these fancy hotels in Dubai spend their off duty hours in wretched conditions, are often away from their family and friends for long periods and work long hours for a pittance. Even a small part of the so called 10 pct service charge does not find its way into their pockets. It is therefore hardly any surprise that one does not see too many young Emiratis pursuing careers in the hospitality industry and instead they focus on jobs in the govt. or other more lucrative careers .
Value for Money and Social Responsibility
Posted by Louie Tedesco, Dubai, UAE on Sunday 11 October 2009 at 09:30 UAE time
Staying in a 5-Star hotel in Dubai at the exorbitant rates they charge is a bit different than paying the same amount in the US or Europe. Who laid the brick-and-mortar of the hotels here? Third-country labourers, earning a pittance. Who provides your services? Low-paid expat staff. They earn Dhs 600-1000 in monthly salaries, the price of your dinner meal and drink at one sitting.
The 5-Star hotel customer could typically care less whether the staff employed there can earn a living wage or not. Even in developed countries, the hotel business is back-breaking with long hours and low pay. But at least there is a semblance of social responsibility - the hotel facilities likely were built by well-earning unionized construction workers and they are run by people who are paid a reasonable living wage.
A typical 5-Star hotel employee in the US or Europe actually has annual vacation days and can afford to take a humble holiday, staying in a hotel themselves, with family too. And they can pay taxes, pay their rent and even afford a car. My Dhs 1000 p/night room or dinner bill allows them to do that there.
My Dhs 1000 room or restaurant bill in the Gulf region simply inflates the bottom line of the hotel operator.
Posted by Louie Tedesco, Dubai, UAE on Sunday 11 October 2009 at 09:30 UAE time
Staying in a 5-Star hotel in Dubai at the exorbitant rates they charge is a bit different than paying the same amount in the US or Europe. Who laid the brick-and-mortar of the hotels here? Third-country labourers, earning a pittance. Who provides your services? Low-paid expat staff. They earn Dhs 600-1000 in monthly salaries, the price of your dinner meal and drink at one sitting.
The 5-Star hotel customer could typically care less whether the staff employed there can earn a living wage or not. Even in developed countries, the hotel business is back-breaking with long hours and low pay. But at least there is a semblance of social responsibility - the hotel facilities likely were built by well-earning unionized construction workers and they are run by people who are paid a reasonable living wage.
A typical 5-Star hotel employee in the US or Europe actually has annual vacation days and can afford to take a humble holiday, staying in a hotel themselves, with family too. And they can pay taxes, pay their rent and even afford a car. My Dhs 1000 p/night room or dinner bill allows them to do that there.
My Dhs 1000 room or restaurant bill in the Gulf region simply inflates the bottom line of the hotel operator.
No one can ever predict the future
Posted by Venkatesh Sridhar on Friday 9 October 2009 at 09:46 UAE time
Like someone mentioned before, never is too strong a word and to have said such a thing was I believe extreme pessimism on his part. He says rates are difficult to raise, if that would have been the case, inflation would have been in low digits even during boom times, which we all know it wasn't.
All this brouhaha over the fact that now prices in Dubai are coming down etc and how they were greedy etc will be repeated once again when the boom cycle returns, any Economics 101 student can tell you that economy is a slave of the cycle, boom to bust to recovery to boom and so on.
So, when the next boom arrives, I am sure Rezidor will not hesitate to increase prices, after all inflation is an evil but a necessary evil.
Posted by Venkatesh Sridhar on Friday 9 October 2009 at 09:46 UAE time
Like someone mentioned before, never is too strong a word and to have said such a thing was I believe extreme pessimism on his part. He says rates are difficult to raise, if that would have been the case, inflation would have been in low digits even during boom times, which we all know it wasn't.
All this brouhaha over the fact that now prices in Dubai are coming down etc and how they were greedy etc will be repeated once again when the boom cycle returns, any Economics 101 student can tell you that economy is a slave of the cycle, boom to bust to recovery to boom and so on.
So, when the next boom arrives, I am sure Rezidor will not hesitate to increase prices, after all inflation is an evil but a necessary evil.
Hotel-UAE.com
Posted by Intehol, Aberdeen, Scotland on Thursday 8 October 2009 at 19:54 UAE time
Development of the mid-market hotel sector will give UAE the best chance of having longterm success as a top tourism destination.
You can build as many big expensive tourist attractions as you want but if accommodation is overpriced you more or less set yourself up for failure.
Posted by Intehol, Aberdeen, Scotland on Thursday 8 October 2009 at 19:54 UAE time
Development of the mid-market hotel sector will give UAE the best chance of having longterm success as a top tourism destination.
You can build as many big expensive tourist attractions as you want but if accommodation is overpriced you more or less set yourself up for failure.
Click here to post a comment
MORE FROM ARABIANBUSINESS.COM
TOP IN MIDDLE EAST TRAVEL & HOSPITALITY
TOP MIDDLE EAST BUSINESS STORIES
ALSO IN MIDDLE EAST TRAVEL & HOSPITALITY
LATEST MIDDLE EAST BUSINESS NEWS
- Sport: Westwood leads Race to Dubai at end of second day
- Politics & Economics: UAE will not drop US dollar peg – cenbank chief
- Politics & Economics: Dubai may see growth of 5% in 2009 - Alabbar
- Politics & Economics: Dubai to act tough on employees’ salary defaulters - paper
- Construction & Industry: Dubai plans start-up help for expat entrepreneurs
SHARE PRICE CHECK
RELATED STORIES
Market Turmoil Focus
3 stories- EXCLUSIVE: Boeing chairman sees more job cuts in 2010
19 Nov '09 | News - More UAE bank mergers predicted in 2010 - Ethos
19 Nov '09 | News - Dubai property market 'may take 10 years to rebound'
18 Nov '09 | News
The Rezidor Hotel Group
| 141 stories- Checking in
4 Nov '09 | Interviews - Ku-wait-a-minute
19 May '09 | Features
Mobile
