Dubai hotels must 'weather the storm' as deep discounting does not increase demand, according to Sebastien Bazin
Discounts on hotel room rates "never pay off", and instead lead to a "blood bath" in the industry, according to the CEO of global hotel giant Accor.
Speaking to Arabian Business about hotel room rate discounts in Dubai, Sébastien Bazin said the practice will stop as hotels are realising deep discounts do not increase demand.
“The big [hotel] groups know [discounts] never pay off. So the first guy discounted, people followed and it became a blood bath. Since the [big hotel groups] have huge staying power, we are getting more and more sophisticated and less and less worried. And we basically weather the storm,” he said.
“I think [hotel discounts] will stop [in Dubai]. It’s not only because you give a 40% discount that you’ll get more traffic to Dubai. That’s nonsense. So just weather the storm, make sure you give 7-10% [discount] to people for them to appreciate that you’re going through some difficult time. But you’re not increasing demand by being a deep discounter. We’re not in the food or retail industry here,” he added.
Accor bought Barcelona-based hotel deals website VeryChic in 2016, which offers customers discounts of up to 70%. Accor, however, limits its discounts to 40% on 5-10% inventory and offer them for a single weekend, three weeks before the date of availability.
“The attractive prices get you a foot in my door, so you understand what we do and you’re very sensitive to what we offer, because you know you’re going to get something, but you also know it’s a rare availability. So we’re not discounting for one week at 20%. We’re discounting for one particular weekend at 40%,” Bazin said.
The chief executive said customers are becoming “experts” at value for money deals, with some motels having to discount to keep the property full.
“If you look at the last 12 months, people are [becoming] pretty expert now. You can discount if you’re Mom and Pop Motels… [They] have to discount because there’s nothing worse than an empty room. But for us, the price of the room is the price of the room,” he said.
However, he added that hotels are expensive to build, and that quality cannot be discounted.
“It’s very expensive to build a hotel. It’s very expensive to pay the staff. And then you get the freshness of the food delivery. You can’t discount it. As far as Accor is concerned, we have never shown the way to discounting anything,” he said.