Hoteliers have cautioned against panic in the industry, and have said the market conditions are a sign of maturity not devolution.
Speaking at the keynote panel discussion on long-term strategies after 2020 at the Hotelier Middle East: Great GM Debate 2016, TRI Consulting associate director Christopher Hewett, who was moderating, asked: "There's a challenging operating environment across the region, so there’s shift in source markets, softening performance levels and continuing increase of competitive landscape as supply comes in, how are you as hoteliers reacting to the paradigm shift? What strategies are you adopting to limit profit erosion?"
The panellists, however, spoke of maturing market conditions and steadying the industry.
Tim Cordon, regional director UAE, Egypt, Jordan & Oman, The Rezidor Hotel Group, commented: "here's a lot of alarmist conversation around the state of the industry. If you take the hotel business in Dubai as whole the outlook still remains relatively positive; it’s still a good place to have a hotel.
"Hotels were always striving for most efficient operations, and what we are seeing today is a maturation of Dubai and the hotel markets in Dubai. With that comes a series of challenges as we move into European or 'developed market' environment."
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Rotana Hotel Management Corporation area vice president - Dubai & Northern Emirates David Prince said: "I look at it a bit like a stock market; we are a bit like sheep and most of us in this room are partly responsible and to blame for that situation.
"Our rates are all being decided by one algorithm from one software platform, so unless GMs of properties are actively driving the rates forward..."
He added: "I would say don't panic and to hold rates. Where we've had high demand periods, we’ve been very successful in holding rates. I've heard many people say you should look to 75-80% occupancy to maximise RevPAR. Your forecast, Chris, suggested it will drop no lower than 75%, so we sit in that optimised band. If that is the case why then are we dropping it – that would be counter-intuitive."
Read the full coverage of the Great GM Debate 2016 in the November 2016 issue of Hotelier Middle East.
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