Here in the UAE we have seen a growth in occupancy and rates over the past few months. Having previously experienced occupancy numbers of below 80%, recent estimations from market analysts suggest that 70-75% occupancy is likely to be the ‘new norm’ for this industry. The average occupancy in the UAE is the highest in the Middle East, with both Dubai and Abu Dhabi performing at 80% in Q2 of 2016, but the big challenge now is dealing with the decrease in RevPAR.
The average daily rate is the biggest culprit behind falling RevPAR. In Dubai alone, we are anticipating 10,000 new rooms in 2016, with 621 having opened in the first quarter of this year, meaning another 9,400 still have to be made available by 31 December 2016. However, the supply has now exceeded demand in the region, which is why the average daily rate is decreasing.
The hotel occupancy records demonstrate the good news is that the UAE is a tourist hotspot. In fact, Dubai is the fourth most visited city in the world now, only behind London, Paris and Bangkok. Therefore, it is important that service and sales go hand in hand to compensate the RevPAR.
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An empty room is a revenue opportunity that, once lost can never be recovered. Conversely, an upgrade to a higher-priced room is arguably the most profitable revenue a hotel or resort can generate. Therefore, empowering your team to be able to maximise on upgrade opportunities and walk-in revenue can counteract the falling RevPAR within your hotel.
You can empower your team through input, development, incentive, communication, opportunities, support, relationships and trust. To break away from the new norm you need to look within your business to see what you have to be able to maximise on every opportunity. Hotels within the region have many guest touchpoints throughout their properties. There are some of the best restaurants, not only in the GCC but the world, housed within these properties.
The main touchpoints you can maximise on are: front desk: room upsells, package promotion, loyalty enrollment, and other services. Food and beverage: meal vouchers, discounts, restaurant hopper packages. Convention services: increased BEO revenue, onsite add-ons, group events. Spa: treatment upsells and retail add-ons. Reservations: conversion, package promotion, loyalty enrollment, and other services. You have many people within your organisation with untapped potential.
This potential can be realised through, as mentioned, the right environment, the right fit and the right actions. As we move toward facing a likely surplus in our core product offering (hotel rooms), the winners of this game will be those who can create demand for ancillary services through an effective service-based sales approach.
About the Author: Frontline Performance Group senior performance leader Mark Norfolk. FPG is a global change-management partner that transforms connections at the frontline by embedding itself on-site with clients. It develops frontline ambassadors through a proven system of customised consulting, ongoing training and one-on-one coaching. FPG energises its client’s team members to achieve transformational long-term results. www.frontlinepg.com MNorfolk@frontlinepg.com
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