RESULTS REVEALED: GM survey 2013
The GM in the Middle East must embrace and understand new technologies while trying to develop a passion for hospitality within the nationals of the countries they work in. It’s a unique task and one they have to master while still running their hotels to the high expectations of owners and guests alike
Welcome to the findings of the Hotelier Middle East GM Survey 2013, which very much picks up from where we left it last year.
The Arab Spring is still impacting hoteliers, both positively and negatively, but increasingly, as was demonstrated last year, the focus is very much centred on competition — both existing and upcoming.
What has become apparent this year is that third party websites are making a large impact on sales from e-distribution channels and hoteliers are still struggling with attracting and employing nationals.
But before we delve deeper, let’s take a look at the wonderful general managers who took part in this year’s survey.
A worthy 63 GMs responded, 44.4% from city hotels and 3.2% from budget hotels. Nearly half (47.6%) work in five-star properties and another 11.1% head three-star hotels, while the remainder work in four-star hotels which once again shows the weighting towards upper-scale properties in the region.
More than half (58.8% to be exact) of respondents look after between 200 and 400 rooms and 50.8% manage between 100 and 300 staff.
Three quarters of the GMs work in the UAE, but we have respondents from Sudan, Tunisia, Saudi Arabia, Oman, Lebanon, Jordan, Qatar and Bahrain.
Thirty six of the respondents have worked in F&B and 40.4% have worked in front office roles on their way to becoming a general manger. However, only one person had worked in security, one in financial control and one in recreation revealing that there is still a very obvious path to follow for anyone who wants to become a general manger.
Sadly, we only had one female respondent this year compared to the two we had in 2012. Having said this, one general manager put the letter “C” as their response. It could have been a typo while trying to hit F for female on their keyboard or we may have discovered a new gender?
The average age of our general managers is a little over 47, with the youngest being 36 and our eldest 60. However, one of the survey-takers claims to have become a general manager at the age of 20 – quite the responsibility for someone so young.
Moving on to hotel performance, last year general managers predominantly wanted to be judged on RevPAR (Revenue Per Available Room), but this year more would like to be assessed on their RGI (Revenue Generated Index), although GopPAR (Gross Operating Profit Per Available Room) was still popular, with 24.1% of GMs saying this was the best measure of a property’s performance.
And as for the most important responsibility of the GM, there was a varied response. “Growth of business through quality delivery”, one suggested; “keep RGI at the top” added another.
One GM said “ensuring owner’s profitability” was their top priority, while HR managers will rejoice at “retention of human resources”.
We particularly liked the response “leading my team in delighting guests” and felt that “keeping up with trends in an ever-changing, fast-paced environment to meet business demands” summarised neatly the challenges a GM faces.
Interestingly, when asked to choose between the happiness of their employees, their guests, their owners and their suppliers, one of our highest paid GMs stated that employee satisfaction was the least important factor – showing that it’s a hard world when you’re at the top.
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Financial Matters
Speaking of wages, its time to see how well our general managers feel they are remunerated for their time and effort.
Looking at this year’s responses, it seems the range of salaries our GMs receive varies depending on the location, size and rating of each property. More than a third of the GMs earn less than US $10,000 a month, with 13.8% earning more than $16,000 per month.
Of those who earn more than $16,000, 87.5% work in five-star properties, with the remainder working in four-star hotels. Of the 75% who received a bonus in the last 12 months, 25% are still unhappy with their current financial package.
Overall it’s a fairly even split between those who think their remuneration is fair and those that are unhappy, with 48.3% of GMs saying they are satisfied. Having said that, in 2012 a disgruntled 46.2% of GMs said they were not happy with their current salary and this has risen to 51.7%.
The good news is that 2013 has been an improvement on 2012 for the majority of respondents. An impressive 73% have noted higher occupancies, 15.9% saying they have been “significantly higher” than the previous year. Only 12.7% saw any decrease in occupancy at all.
A further 69.8% acknowledged a rise in room rates this year, although just over a quarter say rates are down on 2012. However, of those whose rates were down, only 12.5% saw lower occupancy at their hotel. More than half of this group consisted of city hotels and 57% of their clientele are business related.
With such positivity in the results it is understandable that half of the GMs are seeking more financial reward.
The Future of GDS?
But where are hotels getting their revenue from? Last year we reported that “third party websites just pip GDS as the main source of sales for hotels through e-distribution although there is very little separating the two”.
What a difference a year can make. Now, 52.4% of general managers are saying GDS represents only 0-10% of their total sales through e-distribution channels. This compares with 61.9% of GMs who stated that third party websites now represent between 10-40% of their total sales.
These findings appear to show that the increasing trend towards third party websites continues in the higher brackets of sales percentages. In fact, the amount of managers who receive 60% or more of their sales through third party websites is double that of GDS, at 6.4% compared to 3.2%; a trend that we are keen to watch the develop over the coming year.
In terms of departments, rooms account on average for 63.88% of hotels’ gross operating profit, with F&B outlets accounting for 20.31% and a further 11.79% from banqueting. Spas only accounted for 2.08% of hotel operating profit.
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Saturation in the city?
When it came to question whether our GMs believe the hotel markets of Dubai and Abu Dhabi has reached saturation point, there was quite a split in opinion. A healthy 68.3% believe Dubai isn’t saturated, although “development” and “diversification” are cited as elements that are needed to ensure stability.
The picture is not quite the same in Abu Dhabi where 40% of our GMs believe the market is saturated with “too many hotels” and an “unrealistic” pipeline.
But we all know that two heads are better than one so why not market Dubai and Abu Dhabi together? Well 75% say no (marginally up on last year’s response to this question), so the idea is not favourable — may the competition continue!
Our GMs didn’t feel that saturation is a major issue in Saudi Arabia and Qatar, but they did reveal that these states are facing their own unique challenges.
We asked our general managers what they felt were the major issues for both country’s hospitality industries. For Qatar, more than half of our respondents said the alcohol ban was the biggest problem, followed by attracting new markets (38.3%) and competition (35%).
In Saudi Arabia, the biggest challenge by far, according to our GMs is Saudisation (61.7%), while in joint second was recruitment and training (45%) and attracting new markets (45%) in third. It’s worth keeping an eye on how both these countries tackle their perceived problems over the coming years.
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The Big Issues
Taking a more general view, we asked our general managers which were the three biggest issues affecting their hotel’s performance. Increased competition was by far and away the biggest response with 49 selections, while the global economic situation had 29 votes and in third was labour shortages with 17.
Nearly 17% of our GMs cited political instability as an issue, but this was only an option chosen by hoteliers based in Sudan, Tunisia, Lebanon, Jordan and Bahrain.
In the end, the regional split between those that face political stability and those that don’t, was neatly summed up by the fact that 20% of respondents are still being negatively affected by the Arab Spring with 55% believing they are still being positively impacted by it.
This may come as little surprise, considering that the majority of our respondents work in the UAE, and the positive impact of the Arab Spring on the country has been well documented.
However, nearly a third of those affected by political turmoil think it will take longer than 12 months before business recovers, while 5% don’t believe that the situation will ever recover.
But it isn’t an entirely negative picture and despite the very real concerns, some of the positives mentioned by our general managers include “Formula One”, “Expo 2020”, “a new airport”, “improving economy”, “new EK routes”, “outlet growth”, “the building of a reputation for the destination”, “new events in the city”, “weddings” and “new transport infrastructure” among others.
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Agree or Disagree?
Staying on this wave of positivity let’s take a look at general manager sentiment. It would seem that the majority of general managers agree that the industry is in good shape, with hotels improving their services, pay rates remaining generous (although you could argue opinion is split on this one!), governments supportive and laws not restricting hotel operations ( although it seems the respondents in Bahrain disagree with this).
However, the one area where there is clearly an issue is having enough national staff and attracting national staff to the hospitality industry.
When asked if they employed enough national staff at their hotel, a staggering 70% of respondents disagreed with this. Eighty percent disagreed that it is easy to hire national staff. This is clearly a situation that still needs a lot of time and focus, to the benefit of both hospitality companies and the regions they work in.
But the overall impression this year is one of positivity. The general managers who responded feel that competition is the biggest challenge, but isn’t that exactly how it should be.
The region’s biggest hope is for all Middle East hotels to be able to enjoy the stability and prosperity they deserve, leaving our general managers to worry more about new openings, rather than any continued instability.
Fingers crossed next year the only issues will be hotel-related.
Stat attack
- 17.5% of GMs who receive 10-20% of their sales through social media channels.
- 84.5% of GMs say tackling environmental issues at their hotels is high on their agenda.
- 51.7% of GMs aren’t happy with their current salary package.
- $16,000+ Monthly salary earned by 13.8% of GMs.
- 63.88% of GOP comes from rooms division.