In 2015, the Hotelier Middle East Supplier Survey revealed that increased competition and wide-spread undercutting was a major concern, following the previous year’s report of corruption and bribery in the procurement market a worry.

This year, bribery is still an issue, revealed the respondents. However, more pressing concerns highlighted by suppliers included the slowdown of the construction market which is affecting hospitality projects, and a client focus on pricing rather than quality of products.

As always, most of the suppliers who responded to the survey were based in the UAE (81.5%), while others also participated from USA, Germany, Oman, and Qatar.

While most also said they supply to the UAE (92.6%), the other countries where a lot of these companies did business included Oman (66.7%), Kuwait (63%), Saudi Arabia (63%), Qatar (59.3%), and Bahrain (55.6%).

Interestingly, 7.4% said they work in Iran, and a similar percentage still operates in Syria. Jordan is also keeping our suppliers busy (nearly 30% supply to hotels). In North Africa, Egypt accounted for 25.9% of our respondents’ business, while Algeria, Morocco and Tunisia trailed slightly behind.

In terms of the kind of suppliers who took part, respondents could pick up to three choices; it revealed that food and beverage suppliers accounted for 37%, 11.1% were revenue management systems suppliers, 11% amenities suppliers, and 18.5% said they were housekeeping suppliers. Other suppliers were made up of architecture and interior fit-out companies, outdoor furniture, lighting, flooring, IT, BMS, engineering, kitchen and restaurant equipment, and laundry.

POSITIVE PREDICTIONS

A quarter of businesses revealed they showed an annual turnover of US $5 million to $10 million in 2014, while nearly 40% said this was their turnover in 2015. Optimistic about 2016, 58.8% of the suppliers said they thought turnover would increase this year.

Nearly 28% posted a net profit of $250,000-500,000 in 2014, compared to 18% who posted similar in 2015. Nearly 30% showed a net profit of $100,000-250,000 in 2015 instead. However, suppliers seem to be a positive bunch, with 65% saying they hoped that in 2016 this would rise. None of our respondents posted a loss in 2015.

While it would be tempting to say these expectations are based on increased sales prices, an overwhelming majority (82.4%) said prices are largely staying the same, with some reporting a ±0-10% change at the extreme. An educated analysis on this would imply that suppliers are hoping for an increase in both net profits and turnover from an increase in volume sales as well as potential lowering of costs.

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