By Louise Birchall
The new-found bargaining power of meetings buyers might leave hoteliers feeling the pinch, but the long-term impact will positively reposition the Middle East as an affordable meetings destination.
The new-found bargaining power of meetings buyers might leave hoteliers feeling the pinch, but the long-term impact will positively reposition the Middle East as an affordable meetings destination.The Middle East is typically seen as an expensive destination for meetings and events, but more value-add packages and many hoteliers' increasingly flexible attitudes could be changing perceptions for the better, according to experts.
"Hoteliers are a lot more flexible due to the economic situation in terms of contracts, deposits and pricing," says events management company MCI Dubai director of projects Ajay Bhojwani, who often works with hotels in organising congresses and association meetings.
"More hoteliers are able to understand the volume of business involved in meetings and therefore are offering more flexibility, such as negotiating contracts on banqueting facilities and [insisting on] lower number of room blocks as compulsory; that's one area that is certainly getting better and it's good for the industry," he adds.
In the past, most international associations looking at the Middle East as a meetings destination - Dubai in particular - fed back to MCI Dubai that it is just too expensive, but this is changing, Bhojwani says, as more competitive packages are offered by hotels.
"The Middle East could have been perceived as an exclusive destination before and hard to get into. Today, Dubai in particular has repositioned itself as more attractive in terms of overall value being offered through airlines, hotels' initiatives and flexibility. We tell clients ‘let us know what's important to you and we'll make sure we design it around you'," asserts The Ritz-Carlton area vice president - Middle East Pascal Duchauffour.
And it seems customers are not asking for this level of flexibility and value, they're demanding it.
"Today customers want simplicity. They want your best price up front, immediately and they want it to include some of the benefits they know they'll be using.
"We've always shown flexibility, but when you're in a high-demand period you're stronger on some of the terms and the customer knows if they don't guarantee the room they could potentially lose it. Today the demand is very different," Duchauffour explains.
In fact many corporations are taking advantage of their new-found bargaining power, squeezing hotels for the best possible offer and leaving bookings until the last minute.
"Clients know that if they book 48 hours before the event they will get a very, very good deal. We see many customers booking much later nowadays, which changes the name of the game. We need to adapt to it," says Duchauffour.
Part of that adaptation process has seen The Ritz-Carlton launching its Meetings Within Reach initiative to encourage more meetings to be booked before March 31, 2010 and then held by December of that same year.
"Our Meetings Within Reach offer is being rolled out globally and is generating demand for new business, but our primary aim is to rebuild some of the existing markets we had and secondly tap into new markets," says Duchauffour.
And it is these existing markets, which may have been scared away by the expense of hosting meetings in the Middle East in the past, that hotels are most keen to recapture in spite of competition from the Maldives and Mauritius, for example; both destinations being very aggressive and creative in their marketing for meetings and events.
"It's a stable business that can maximise revenue as congress groups often book between 100 and 200 bedrooms, pay for delegate packages incorporating audio-visual revenues, breakfasts, lunches, dinners, coffee breaks and so on; all adding to the revenue stream," explains JW Marriott Dubai assistant director of event management Martijn Dekker. The JW Marriott Dubai is one of many hotels that is focusing on groups and events business for the New Year, starting by reassessing its market segment and looking at where business is coming from.
"Corporates are looking for inclusive rates so one room in a delegate package includes things like transportation and other items. They're looking for one package price so they can present their budget to their boss," adds Dekker.
Similarly, Duchauffour says The Ritz-Carlton is "focusing on value, we want to make sure the customer gets the message that they get what they want".
So that raises the question ‘what do buyers want from hotels?' The third Middle East Meetings Industry Research Report released at GIBTM 2009 in Abu Dhabi revealed that cost is now the number one influencing factor for buyers when placing an event in the region.
The research was carried out between January and February 2009 and generated feedback from 258 meeting buyers and 167 suppliers from across the globe. The 258 buyer respondents - who were from 47 countries, with 31% from the Middle East - also reported that ‘availability of accommodation' had dropped from third place to eighth on their list of concerns.
So gradually, hoteliers are recognising that value extends beyond cheaper rates; it encompasses every aspect of the delegate package on offer, and many are investing in new facilities as a result of this.
"We are predicting that local meetings will be increasing in quarter four into 2010 and we hope that this ensures room nights as well," says Jebel Ali International (JAI) Hotels assistant director of sales Shane Jameson.
The group has invested in its facilities with JAI Hotels' Oasis Beach Tower, Dubai, developing a dedicated video-conferencing room and secretarial suite.
"We cannot get by with just a room and a flip chart anymore," asserts Jameson.
Similarly, W Doha area director of sales and marketing for the Gulf and Saudi Arabia Wael Rashed says the hotel is aiming for MICE to make up 25% of business by 2010 from both the regional and international markets.
The hotel, which opened in March, has developed a unique meetings offering according to Rashed, who adds that Doha is growing as a MICE destination.
Furthermore, Sharq Village & Spa, Doha, general manager Hoss Vetry claims meetings business already accounts for 25% of business and said the hotel would be rolling out a new meetings programme from October 20, 2009 to March 31, 2010. Having already converted one of the Sharq Village & Spa villas to dedicated corporate accommodation, Hoss says if the idea "takes off" the hotel will look at converting a second villa.
Investing in meetings
By investing in meetings facilities, the Middle East hotel industry also becomes more appealing to tech-savvy nations that expect to see the very latest technological solutions and facilities available at their designated meetings destination.
While Jameson is keen to win back international clients that have been enticed by "great offers for MICE groups" across Asia and Europe, various sales initiatives promoting the hotel's new facilities have grabbed the interest of new markets such as Eastern Europe, East Asia, Australasia, Turkey, South America and China, which is "looming as a major player".
"The Chinese really get the most out of a destination; going on excursions and sightseeing. If handled correctly, they can also be incredible ambassadors for the region. With their vast population and the country's mass media, I believe China's travelling population will soon be in frenzy over Dubai's glamorous attributes," he says.
Easy access between the UAE and China makes this even more of a possibility, with Middle East airlines, including Etihad Airways and Emirates Airline, flying direct to Beijing, Guangzhou and Shanghai.
Gradual growth to continue
In summary, ticking the boxes for cost, good quality accommodation and facilities is likely to position the Middle East as a strong contender as a meetings destination for new and existing markets.
Even in spite of the challenges outlined and those posed by the economic downturn, the Middle East meetings industry experienced 35% growth between March 2008 and March 2009, reported the third Middle East Meetings Industry Research Report.
The report also predicted that this upward trend would continue in 2009, with 73% of buyer respondents predicting that there would either be an increase in the number of events or that the number of events would remain the same over the next 12 months.
"Despite a difficult and challenging year the results, both from a buyer and supplier perspective, show that the industry is in good shape to ride out the current economic climate", concludes Reed Travel Exhibitions Group exhibition director meetings and incentives events Paul Kennedy.