With tumbling RevPAR and average daily rates (ADR) at a 14 year low, the figures released by hospitality analysts STR reinforced what many hoteliers already knew — the market is changing. Occupancy may be a fairly healthy 66% for July, but owners and operators alike are probably asking where their fat margin has gone and if it’s likely to come back.
It is not all dour headline figures; Dubai’s Department of Tourism and Commerce Marketing (DTCM) claims a record 8.1 million people visited the emirate in the first half of the year, leaving it well poised to exceed 2017’s total of 15.1 million tourists.
A recent report from Alpen Capital predicts the GCC’s hospitality market will register 7.2% compound annual growth rate (CAGR) between 2017 and 2022, driven by a combination of major events, buoyant oil prices, regulatory initiatives and spending on hospitality and tourism projects, driven directly or indirectly by government-led economic diversification efforts.
Although the fundamentals remain strong, it is clear that the situation will remain challenging as the number of available hotel rooms skyrockets, saturating the market and squeezing RevPAR and ADR. There are currently 600 hospitality projects under construction across the region. According to STR, the number of availabile rooms just in Dubai will leap from 100,000 and 132,000 in the next 18 months.
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The rapid growth in available rooms is being driven by the proliferation of quality mid-range hotel brands, which is a natural and necessary step in the hospitality industry’s evolution.
Senior hospitality figures remain divided over how long the current market crunch will continue. But the big question is the sustainability of the industry in the aftermath of events, like Expo 2020 and the FIFA World Cup in 2022.
If lower RevPAR and ADR are the new ‘norm’ for the foreseeable future, then offering compelling customer service takes on a greater significance. But the industry’s understanding of ‘customer service’ also has to radically change as the digital age makes personalised ‘experiences’ a reality.
Tomorrow’s successful hotel brands will have to understand that data holds the key to building personalised relationships and delivering compelling guest experiences.
However, most hotel operators struggle to comprehend how to integrate technology with front of house hotel services. Ideas like the robot concierge are little more than gimmicks. Hotels need to build a picture of their customer, extract actionable knowledge from it and share it with front of house staff so they can target services at guests and offer greater value.
Loyalty card schemes are a step in the right direction. They offer an opportunity to gather data and build a detailed picture of the guest, but often these schemes fail to be responsive enough, or offer tangible value to anybody, but the very top clients.
Given the opportunity to gather data on customer preferences while they’re staying at a hotel, the amount of data that simply slips away is mind-boggling. The challenge of compiling a coherent single view of a guest across multiple venues in one property, let alone across multiple properties, are not just technical, but relate to a hotel’s core business processes — both front and back of house.
However, hoteliers across the spectrum have to realise that customer service is moving beyond comfortable rooms, a lobby that offers an Instagram-moment and a hotel app. And it going to be far more challenging going forward – surviving and indeed thriving in the post ‘mega event’ hospitality market of the Middle East will require far greater knowledge and understanding of guests and their requirements.
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