Industry Concerns
Among the big concerns shared by suppliers is the increasing competition, and the practice of undercutting to get deals, with more than 80% of respondents attesting to price wars, while 63.64% said increased competition was the biggest challenge facing their business in 2015.
Commenting on the practice of undercutting, Rational International Middle East chief representative Simon Parke-Davis says it’s a common occurrence around the world, and not just in the Middle East alone.
“It is known as competition and is designed to give customers the choice. However it can be misused and give an unfair advantage. We believe in economies of scale and [offering] customers benefits throughout the whole life cycle of our products. So we invest in people and increase our capital to show commitment and professionalism to the customers and distributors in a way no other manufacturer is able to,” he tells Hotelier.
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Sparrow International sales director Nader Hijazi also said customers today are more conscious of price, compared to the market before the recession in 2008.
He explains: “What I’ve noticed now in the market is that people are very cost-conscious. It’s not the Dubai of pre-2007, where no one cared about cost and they were all about quality. Now there is enough competition in the market and the field is more levelled, so they look at price as well as quality.
“So when we face a situation where one of our competitors tries to undercut us, we try and explain to potential customers that the benefit they get from working with us cannot be measured purely in financial terms — for example, the maintenance, the support, the quality of the products, and the transparency we offer.”
Despite the challenges, suppliers overall saw increasing competition as a sign of growth in the industry.
Monin MEIA trade marketing manager Pierre Fraboulet comments: “Competition is great, because it is a global sign that the industry is performing.
“If there was no competition, then there would be a problem.”
Other stumbling blocks suppliers mentioned include reduced workforce (4.55%), outstanding debts they are owed (4.55%), and market saturation (13.64%).
They also pointed to bribery and corruption — some of the biggest causes for concerns in Hotelier Middle East’s previous supplier surveys — as an ongoing challenge. Respondents this year were split evenly, with 50% saying bribery was negatively affecting their business, while the rest felt otherwise.
Similarly, 50% of respondents said they had been in a situation where they were asked for a bribe by a procurement manager or buyer — 4.8% less than last year — while an equal number said they had never faced such an issue.
Nearly half of suppliers surveyed (54.55%) said they knew other firms that had offered bribes to secure business. More than 85% of participants however, said they would never resort to bribing a procurement manager or other buyer, while 13.64% said they would consider it.
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