What makes a successful hotel?

Keep prices reasonable and the guests will come, industry expert Guy Wilkinson tells hotel operators worried about the economy.
What makes a successful hotel?
By Guy Wilkinson
Wed 05 Nov 2008 04:00 AM

Strange as it may seem, there are many people around the world, and particularly in this region, who are rubbing their hands with glee as the global recession bites.

Obviously, people and companies who still have lots of cash are in a strong position to take advantage of those who relied on borrowings.

There are a fair few property companies, including hotel developers, who fall into the latter category - fall being the operative word. But even among those smart hospitality investors who are enjoying their liquidity, there are still the effects of global recession on the markets to consider.

If the room rate is right, you can be forgiven if your hotel is tucked away up some dark alley, decorated by the local infant school and named after your old pa.

It's an inevitable damper on guest demand, both corporate and leisure, regional and international, and means hotels will have to work harder to win guests.

And for those many Middle Eastern developers still bravely going ahead with new hotel projects, how do they plan to compete in tomorrow's more cut-throat marketplace?

Until the last few weeks of global banking meltdown, a major success factor for many was just plain luck - being in the right place at the right time.

Owning a hotel in Dubai or Abu Dhabi in the last few years was itself a recipe for success. Just opening the doors meant the hotel would fill up.

But already there are signs that some of the most recently-launched luxury properties in these cities are experiencing the kind of birth pains that more mature markets routinely expect.

Admittedly, we're talking about not being full from day one, which is hardly a motive in most countries for firing the GM. And bear in mind that regional break-even occupancy rates are well below 50%, thanks to payroll costs that are much lower than in other parts of the world.

Nevertheless, what it means is that the ‘build it and they will come' mantra has to be filed away for the present and crafty strategy deployed in its place.

In a more specific sense, being in the right place is a factor that developers can influence; if they must chant something, let it be ‘location, location, location'.

Building on a plot that is near sources of demand, arterial roads and transportation hubs obviously makes sense and will increase the number of guests who need to stay at the property, as well as reducing its reliance on those who have a choice as to whether they want to or not.

To some extent, timing also counts. Being first to market with a certain type of hotel, or simply the first in a locality, is usually a much better idea than adding yet another hotel on the strip - although in terms of beachfront rivieras, like Jumeirah Beach, Al Aqah Beach in Fujairah or the clifflands east of Muscat, which are becoming known as international tourist destinations, there is actually safety in numbers.

Of course, branding is very important, especially in this region where designer clothes and personal accessories are so coveted. And yet brands are strange intangible things when it comes to hotels.

Who can really define the difference between a Holiday Inn and a Novotel, a Corolla and a Sunny? The point is that most people are not bothered with the difference.

The very names imply a reliable product and service and when you're making a last minute booking on the internet, it counts for a lot that you can find people who you can assume know what they're doing and talk your language in a strange country.

Ironically, there are so many hotels under development in this region that the tried and tested brand stables (Accor, Hilton, IHG, Marriott, Starwood) are so swamped with opportunities that they are running out of brands and at risk of devaluing the currency.

Hence such new names as Pullman, Waldorf, Doubletree, Staybridge Suites, W and aloft - and hence the launch of USP-touting new chains like Emaar's The Address.

This is in tune with a now mainstream movement away from Holiday Inn's ‘the best surprise is no surprise at all' philosophy towards a whole slew of brands promising to satisfy an apparently important, high-spend niche market of new age hipsters and lodging snobs who crave a cooler, more design-oriented ‘lifestyle' - and one that is of course crammed with surprises to keep their pulses racing.

Seriously though, there's nothing wrong with any attempt to get away from bland homogeneity, in my view. After all, it is all too often that a huge budget is wasted on ghastly impersonal design and the application of good taste is always welcome.

Likewise with service. Running a hotel is not rocket science, but on so many occasions it seems that it must be. And you don't have to invent a new way of checking in to be successful.

Just sticking to the old virtues of good manners, efficiency and anticipation of guests' needs is probably worth a lot more as a success factor than being able to tick the brand box, or funky design - and is certainly more important in influencing repeat business.

But at the end of the day, most of the above factors pale in comparison to honest-to-goodness reasonable pricing. If the room rate is right, you can be forgiven if your hotel is tucked away up some dark alley, decorated by the local infant school and named after your old pa.

Of course, it helps if the bed bugs don't actually bite, but I'm quibbling.

As a punter "you pays your money and you takes your choice". As a hotel developer, bear that in mind and make sure that, whoever you're trying to impress, you do it well. It will count more and more in the coming months.

Guy Wilkinson is a director of Viability, a hospitality and property consulting firm in Dubai. For more information, email: guy@viability.ae

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