A question of price
Eyebrows were raised in the opening panel session entitled Hospitality Leaders & Innovators, moderated by Viability director consultant Guy Wilkinson and comprising Olivier Hick, vice president operations, Gulf and Levant countries, Accor; Christian Grage, vice president operations Arabian Peninsula, Hilton Worldwide; and Mohamed Awadalla, CEO, Time Hotels, when Awadalla proposed a cap on room rates should be enforced in areas of Dubai, such as Al Barsha, saying: “During Eid, none of the hotels in Dubai had 100% occupancy because of the overpricing and if they find another destination, we’ll never see them again, so we have to work together, we don’t have to threaten or fight each other.”
“I even suggested to the DTCM that every hotel should have a ceiling rate,” Awadalla revealed.
“If we have a rack rate, hotel apartments and individual hotel companies can sell like Hilton and Sheraton in Jumeirah and not increase prices during high season,” he explained.
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This comment brought Hilton Worldwide’s Jagersbacher to his feet, as he asserted from the audience: “I think we don’t want to go through the same system as we have in Kuwait where there are set rates for certain markets.
I believe that we have to look at the overall investment in building our hotels and properties and I think we should take a commercial approach. If you want to have a residence and want to have a revenue of x or price that’s up to you. I think commercially, you are going to have to make sure that we satisfy the needs of our owners and the local businesses. To create gaps for set rates, I think that’s terrible”.
Accor’s Hick, also disagreed with Awadalla, stating: “I think you should create demand and you should be cashing in on that demand. We are here to make profit and to drive revenues and work with our owners as partners”.
Jumeirah’s Gerald Lawless was more vehement in his response: “This city, and the market here, has thrived for so long on the basis of a free market approach to everything and I think it would be a massive mistake to even talk about capping rates,” he said.
“The market finds its own level, the market will develop,” explained Lawless. “We know when we get to 2020 we will be able to accommodate 20 million people, even without Expo 2020. So the market will find its own level and the market in Dubai always has found its own level and I believe we should never talk about capping rates. This is a free commercial market and we are strong competitors and I think hoteliers in Dubai are very good at competing in one of the most competitive markets in the world.”
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