Five-star hotels must keep rates high

Five-star hotels have a responsibility to consider the market they are in before lowering rates, said budget hotel Holiday Inn Express Dubai cluster general manager, Ziad El Khoury.

In an exclusive interview with Hotelier magazine, El Khoury said the tendency for five-star hotels to lower prices during the summer months meant that budget brands often lost out.

“Everybody should be priced correctly,” explained El Khoury.

“Hotels should be priced in a way to have room profitability in all seasons. Five-star hotels cannot go really cheap to a stage where they are not making a profit, and at the same time affecting us so that we have to drop our rate to the point where we are not making a profit,” he said.

He also said that rate-dropping affected the image of a destination, such as Dubai, which pitched itself to holidaymakers as a luxury one.

“Dubai was seen as a very expensive destination and everybody was priced very very high, so I think now we are in a time when everybody should be priced correctly — we have the mid-market brands coming in to the market very strong. I think there needs to be a little more effort in terms of revenue management so that everybody is priced correctly,” he added.

Rates in Dubai have fallen since the recession, with 5-star brands being forced to lower prices to meet the expectations of a market with less disposable income.