A panel discussion entitled A panel discussion entitled "War Games - Fighting the Rate War" took place at the Hotelier Middle East Great GM Debate 2017 at Le Meridien Dubai Hotel and Conference Centre.

The issue of UAE hotels dropping rates could be due to a combination of a reactive response to market forces, lack of understanding of the hotel's overall strategy in relation to profitability and the absence of a proper revenue management strategy, so hoteliers agreed during a panel discussion entitled "War Games - Fighting the Rate War" at the Hotelier Middle East Great GM Debate 2017.

Moderating the panel was TRI associate director Christopher Hewett, with the following hoteliers participating in the discussion: Rotana Hotel Management Corporation area vice president, Dubai and Northern Emirates David Prince; Southern Sun Abu Dhabi general manager Pierre Delfau; Radisson Blu Hotels, Dubai Waterfront & Dubai Canal Views cluster general manager David Allan; and Frasers Hospitality area manager Middle East & Africa Cyril Warsono. 

Prince kicked off the discussion by commenting that the issue of hotels dumping rates occurs as a combination of internal pricing decisions being made as a reaction to what is perceived to be prevailing market conditions. "It's a self-inflicted wound in many cases," he said. 

He reminded the panel that the first four months of 2017 actually saw average hotel occupancies grow by 2.6%.

"We need to distinguish between 'real risk' as seen during the summer – when occupancies were very much under pressure – and 'perceived risk', which was the case during the first four months of the year when people were believing bad news and making decisions based on that which they thought was going to be the market," he said, adding that he personally "pushed" for his GMs not to drop their rates with the result that during those first four months, RevPAR within his cluster of hotels "actually grew".

While he admitted that his team was "nervous" about the strategy, he stood his ground. "As with anything, once you show that it works, then people get more engaged and they follow more willingly because they see the benefits."


Allan highlighted the need for hotels and hotel companies to align with an improved strategic understanding of which markets and which segments to target.

"The bigger issue is that hotels and hotel companies need to have a better understanding of what particular market segments to target. By not setting leisure rates or corporate rates correctly, they are putting pressure on certain boundaries," he said, adding that historically, business in Dubai had been so good for such a long period of time that even now, "a significant number of hotels still have not switched their ways of thinking – they need to focus more on, this is my market, these are my segments".

Delfau chimed in by agreeing on a similar "complacency" of the mindset of certain hotels in Abu Dhabi and encouraged his fellow hoteliers to seek the challenging route. He narrated an example of how at his hotel, business from a source market was declined because the price offered was "simply too low" and how, he and his team pro-actively pursued other source markets instead.

"It is certainly harder to go find the markets that offer the right rates for the product that we have but it is possible," he said, while emphasising the importance of communicating to the sales team how the hotel's rates are directly related to its bottomline.

"You need to ensure, as a general manager, that the sales team understands what the strategy of the hotel is, what you need at that time for your property," he said. "Very often they will not understand the relationship between the GOP and the rate unless you explain that to them. Sell your property at that price and this is what happens to our GOP."

"It’s not always easy but you have to stand strong and prove to the rest of the community that it can be done," he said.

Delfau reiterated that he is not a believer of deep discounting practices, saying, "Discounting your product so much, just makes no sense. First of all, that client is not going to come back to you. He’s only loyal to you as long as your rate suits him. The day you start increasing your rate, he’s gone. That client is not loyal; he’s only there because of the rate."



The Hotelier Middle East Great GM Debate 2017 took place at Le Meridien Dubai Hotel and Conference Centre.

Story continues below
Advertisement