Hotels in the UAE will no longer be able to charge guests $1,000 a night for a 'mediocre room' according to the vice president of hospitality asset management at Dubai Properties
Hotels in the UAE have been overcharging guests as local rates have been ‘out of sync’ with global room prices, leading to increased discounts in the market, according to the vice president of hospitality asset management at Dubai Properties Group.
Speaking to Arabian Business at the Gulf and Indian Ocean Hotel Investors’ Summit (GIOHIS), Stuart Etherington said hotels in the UAE will no longer be able to charge guests $1,000 a night for a ‘mediocre room’ as the market matures and discounts decrease.
“If we look at the UAE as a business marketplace, we’ve seen a discount culture in the last 3, 4 years primarily because we’ve been out of sync with what the market is paying globally. If we start to look at the maturity of our industry, and the maturity of the guests coming in, we won’t discount," Etherington said.
“We just need to price accordingly. No longer will you be able to charge $1,000 a night to stay in a mediocre room in a B-grade location just because we’re the UAE.”
While new hotels with various price points have generally lowered market rates, Etherington said some hotels have maintained their rates.
“What we’re seeing is diversification in our market. The market itself is maturing. What we’re seeing is diversification within multiple channels, with 3-star, 4-star and 5-star hotels coming. This is statistically driving our rates down because of the blend, however, it’s not all doom and gloom out there,” he said.
“A 5-star hotel on a beach is still a 5-star hotel on a beach, and is still achieving similar rates it was achieving 5 years ago,” he added.
Dubai Properties Group is part of the Dubai Holding Company, a global investment conglomerate which operates across 12 countries and includes the Jumeirah Group, which is known for iconic projects such as the Burj Al Arab, Jumeirah Beach Hotel, Madinat Jumeirah and Jumeirah Al Naseem.
All hotels, regardless of the Star ratings, should concentrate on "High Occupancy" rather than high tariffs, lower and reasonable tariffs will ensure that hotels go full, thus leading to lower overheads especially on salaries of the staff. Attractive business destinations so also attractive holiday destinations, both of which Dubai is, will make guests come repeatedly to their reasonably priced hotels. F&B should also be sold at reasonable prices. Higher the occupancy, higher the profits.
Dubai has historically always had exceptionally high hotel rates, which may not bother the business traveller who is not personally paying the bill, however leisure travellers are affected and deterred from visiting Dubai and all it's magnificent offerings. With Emirates, BA etc offering flash seat sales/cheaper air fares from time to time the end cost remains very high when F & B is added to the equation. No one wants slovenly guests but eventually some hotels will accept lower occupancy rates and the the prices go up again! The same goes for Abu Dhabi.