REVEALED: The Hotelier Middle East GM Survey 2014

The Hotelier Middle East GM survey is back for 2014, and following last year’s Dubai Expo win, it seems general managers are waiting for huge hotel pipelines to come to fruition, while considering how they are going to hold on to staff and drive revenues to keep owners happy in a rapidly changing market.

With 73.7% of respondents UAE-based, it’s not surprising that our first GM survey since Dubai’s Expo 2020 win reports that the major challenge general managers perceive is upcoming competition in the region, and supply potentially outweighing demand in the years to come.

Aside from the UAE responses, 14% of those who participated in the survey were Qatar based and 8.8% are running hotels in Saudi Arabia, while 1.75% each were based in Oman and Jordan.

A total of 57 respondents participated in the survey and they represented a mix across city hotels, resorts and hotel apartments, with the lion’s share managing city hotels (31.8%) and 24.5% business hotels, while 21% run a hotel apartment property.

For the respondents’ hotels, 39% of revenue is generated by business from corporate individuals, and 32% from leisure individuals; 14% and 13% comes from business groups and leisure groups respectively, and 7% of business is driven by MICE guests.

More than half of the respondents were from five-star properties (56%), while 35.1% manage four-star businesses and the remaining 8.8% are at the helm of a three-star. While almost a third of the participants are general managers at properties with 100–200 rooms (31.6%), around half lead hotels that have between 200 and 400 rooms and 8.8% head up 2000–3000 room properties.

In terms of entry into their roles, 60.4% came from F&B, while 43.7% grew into their positions from front office and 37.5% from rooms. Housekeeping departments produced 12.5% of our GMS, yet just 6.2% came from each of finance and recreation.

Performance for 2014 has been positive so far, with 57.8% of respondents reporting occupancy slightly or significantly higher than last year, while only 7% said it had been significantly lower.

Revealing a similar trend, room rates were reported by 55% of respondents as being slightly higher or significantly higher than 2013, which compared to 69% last year, suggesting a slightly slower growth rate in 2013—2014 than 2012—2013, perhaps owing to a low starting base in 2012 as a result of the lingering effects of the global economic downturn.

Average rates this year were reported by 19% of respondents as being around the $175–200 mark, while 17.5% (most likely those from three- and four-star hotels), said rates stood at just $75-100. Just one respondent claimed average rate at their hotel was $500–750.

Among the first three quarters of the year, Q1 was reported as the best performing period in terms of occupancy by 72% of respondents; 19.3% reported Q2 was the best, and 8.8% said Q3 was the most favourable. Flipping this on its head, 80% of respondents claimed Q3 was the worst period, while 8.8% said Q1 was.

Of the GMs surveyed, results revealed that 67% of revenue for their hotels comes from rooms, while 10% comes from F&B banqueting, and 17% from F&B outlets.

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However, the extent to which certain e-distribution channels generate this revenue has changed quite notably over the past couple of years. While last year 74.6% of GMs said third-party websites represented 0-30% of business, this year 84.4% said the same, showing quite a significant increase.

Saying this, 83.3% said that global distribution systems account for 0–30% of revenue generation, while 78.9% say brand.com represents 0–30% of revenue. In terms of social media, 94.7% of survey respondents said this accounts for 0–20% of revenue generation, however the majority of these (75%) reported the figure was under 10%.

The most important factors for a hotel in the Middle East were by far location, value for money and personalised service, with 65% of GMs reporting value for money as the most important of all. The usual bugbear — lack of talent — was reported as one of the major challenges facing hotels today, yet this was outweighed by the trials of rising costs of living and increased competition.

In fact, the vast majority (70.9%) cited oncoming supply as the biggest worry going forward. While 54.5% said that significant addition has driven rates down, another 16.4% said occupancy levels have already suffered as a result of oncoming supply. However, 14.5% claimed that they have seen no significant additional supply.

The GMs also cited geo-political issues as a concern, including problems in the CIS markets. Refurbishments and construction noise, and achieving occupancy and revenue targets were also noted as current issues.

Despite this, hoteliers were positive about scope for attracting new markets, with some citing places like India, Africa and China as those that should be explored. New infrastructure projects, particularly in Dubai and Doha were welcomed, and hoteliers mentioned that their locations would always stand them in good stead.

Some looked to troubles in neighbouring countries as an opportunity to increase business, but saying that, overall confidence in the region’s political situation is increasing, with 45.5% saying that the effects of the Arab Spring have had no impact on their business, and only 18% saying they’ve been negatively impacted (down from 20% last year). While last year 55% of GMs said they were being positively impacted by the Arab Spring, this year that figure was down at 36%.

Almost all of the respondents (95%) said that the region’s hospitality industry is in great shape, with 30.9% strongly agreeing with the statement.

A huge 81.8% believe that hotels are improving their services, while more than half lamented the lack of national staff working in hotels, with 96.4% claiming it’s just not that easy to hire them. While not necessarily a directly related issue, 65% of GMs reported that governments aren’t doing enough to support them.

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The next boom town
While a number of respondents claimed that Egypt is making a comeback (see our Egypt market update on p.40), a number of GMs claimed that if there’s going to be another regional boom town, Doha and Abu Dhabi stand a chance of getting ahead of the rest.

The majority of respondents, however, admitted they think Dubai will always lead the way. While 34.5% said that Dubai won’t reach market saturation as long as it diversifies, nearly the same number (32.7%) reported that the pipeline is unrealistic. Another 21.8% said that there are already too many hotels in Dubai and a similar picture was painted for Abu Dhabi.

Interestingly, more than two-thirds of respondents (67.2%) think Abu Dhabi and Dubai should not be marketed together as one destination, whereas the rest said this was a good idea. Other ideas for increasing tourism to Abu Dhabi were continuing to develop leisure attractions (69%), further developing the island offerings (32.7%) and diversifying the hotel landscape to offer more mid-scale supply (26.9%). The GMs also suggested reducing airline prices and marketing the city as a region, with packages including Al Ain.

General managers across different parts of the region experienced varied challenges. For the Saudi Arabia-based respondents, Saudisation was the biggest concern, with 52.7% reporting this as a problem. Cited as concerns by 40% of participants were recruitment, training, attracting new markets, and legislation.

In Qatar, attracting new markets was similarly an issue, while alcohol legislation was another. Lack of infrastructure came out on top however, with 45.5% saying this was the biggest problem.

On a more personal note, regarding the day-to-day responsibilities of the general manager, the most testing issue for GMs is balancing owner, operator, guest and staff requirements. Managing owner expectations was a major concern for hoteliers, while a lack of talent, and retaining key staff was another worry.

Interestingly, general managers reported anecdotally that their most important role was staff mentoring, helping to develop talent, and nurturing upcoming leaders. This was revealed as being more important than keeping owners happy, driving revenue or guest satisfaction.

However, our quantitative data shows that 68% rated guest satisfaction as their highest priority, with only 18% citing staff satisfaction as key. Owner satisfaction came somewhere in between, with 14% saying this was their top concern.

To keep owners happy, our GMs said, clear, regular and transparent communication was essential, while driving business and achieving ROI was also important. Other methods included managing expectations, and educating owners on the market; coming up with creative revenue streams and delivering on promises.

Speaking of priorities, 80% of respondents believed that tackling environmental issues was high on the agenda and even more gave importance to embracing social media (90%). Seventy-eight percent outsource this function, compared to 22% who manage social media in-house.

General managers, not surprisingly, reported that meeting new people — both guests and staff — was one of the most enjoyable parts of the role, along with tackling new challenges daily and the diversity of being a general manager.

However, they lamented the stress of the job, the long hours and juggling various stakeholder requirements. Some mentioned licensing procedures, low season challenges and ungrateful owners as added trials, while one respondent claimed that TripAdvisor was the biggest irk, however the individual qualified this, saying the site can be constructive if the user is honest. The majority of respondents very encouragingly, however, reported that they disliked absolutely nothing about their role.

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Looking to the future, 62% are happy with the development opportunities to hand, with many general managers hoping to move up to the next level in the coming years, from area roles to corporate office and even CEO positions.

Many, however, said that they were simply looking to get better at their current job, while continuing to be a brand ambassador of the company and striving to obtain a better work-life balance.

Others claimed that they harboured a dream of setting up their own business or consultancy, with one participant hoping to establish a food and beverage consultancy specialising in innovative F&B concepts.

A major topic of interest was general manager salaries, which overall were similar to last year. While 34% of respondents claimed to earn less than $10,000 a month, two thirds earned over this amount with the majority taking home a monthly $12,000–$12,999.

A lucky 14% earn more than $16,000 a month (compared to 13.8% of participants in last year’s survey), while a less fortunate 7% are paid less than $7999 a month.

While salaries don’t appear to have changed drastically over the past 12 months, and roughly the same percentage of GMs have reported receiving a bonus as in 2013 (75%), more of our respondents this year claim to be happy with their salary (60% this year compared to 48% last year).

Overall, the impression given by this year’s survey is that while GMs are fairly positive about their responsibilities, development opportunities and salaries, there is still uncertainty regarding the region’s ongoing political unrest and a new wave of upcoming competition.

Last year’s Dubai Expo win has created a buzz, however GMs are anticipating tough times ahead with supply gaining ground, and the resulting strain on staff retention and recruitment.

This year, like last, there was only one female respondent, reflecting the continued underrepresentation of females in GM roles across the region.