Destination Management Companies (DMCs) deserve to receive overrides for securing hotels business, according to Arabian Adventures and Congress Solutions International senior vice president Frederic Bardin.
“The advantage we have is that this (the UAE) is the only place we are selling, if not just Dubai, so all of our efforts are focused on this and we can have a certain influence in terms of where people go,” he told hoteliermiddleeast.com
“We don’t have influence with the tour operators, but we do with groups and if we take over a booking we do the work that neither the tour operator of the hotels has to do.
“They get everything done for them and we are the ones on the ground doing the work - we [even] pay hotels upfront and then claim the money from the tour operators later.”
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Bardin was speaking as Dubai’s hotel industry is getting its feathers ruffled over the override tactics of some individual hotel groups and properties.
Movenpick Hotels & Resorts’ new business development director, Guy Epsom, said he knew of at least three major hotel groups that were offering overrides as incentives to DMCs for volume bookings.
“They are offering overrides to secure business, which is not a good situation, because it means everyone has to follow suit, putting us in a vulnerable position,” he said.
Another hotelier, who wished to remain anonymous, implied that rather than hoteliers driving the overrides to steal market share from rivals, it was the DMCs themselves that were asking for 10% commission without even guaranteeing volumes.
Bardin said commission rates varied but the norm was 5% and stressed that Arabian Adventures had not been asking for 10%.
“We always negotiate, especially with groups, and then it’s down to supply and demand, but it’s unreasonable to ask for rates of 10% to 20%,” said.
Bardin implied that some DMCs were pushing for greater commissions, “because we still have this souk mentality here”.
He also stressed that as a result of some DMCs demanding higher commissions, hotels would more than likely increase rates to counteract the impact.
In fact, hotel rates, and the fact that even during recessionary conditions, Dubai hoteliers had been greedy and commanded “some of the highest room rates in the world”, was one of Bardin’s biggest bug bears.
For more on this story see www.hoteliermiddleeast.com tomorrow.
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Dec 9, 2009 , Thailand
Paying overrides reduces hotel revenues, so can ultimately affect quality... eg less available to maintain hardware of the property [renovations], less for labour cost (so staff and thus services may be reduced) which will backfire on the property (destination)... unless of course the 5% is pric...