With increasing supply in the Middle East, hotels and hoteliers are contending with static demand and downward pressure on the ADR and RevPAR.
To strategise for positive 2019 outcome, Colliers International head of hotels in MENA Christopher Lund shared with Hotelier Middle East a few important insights for general managers in the region:
- The increase in competition with the continuous opening of new hotels is the primary concern for GMs in the region. GMs must ensure their property stands out and delivers high quality service to secure bookings and maintain an adequate cash flow.
- It’s natural for existing hotels to see a compression in revenues over the next year due to new supply, and GMs will therefore have to be creative with their cost saving measures to ensure owner returns remain stable while the guest experience is not impacted.
- Food and beverage within hotels is under pressure from increasing competition from new and innovative concepts in the city, hence GMs should start reconsidering the conventional operating model for F&B in order not to impact the hotel’s profitability ratios, which could take the form of for example outsourcing.
- Net profit is the most important element during a highly competitive market as a result, GMs will have to ensure the continuous flow of revenues by maintaining adequately staffed sales and marketing departments to ensure hotels maintain their presence and relevance to their consumers.