Looming rate war threatens Doha hotel industry

Posted by: Javier
12 Apr 2012
The rates will drop one way or the other. Why does a room in DXB cost more than in DOH? ( Actually not always true) It's not only because of the hotel, it's because you have a much wider offer of activities inside and outside of the hotels. Dubai offers everything that the "West and also the rest" can offer. The goverment backs this policy and that's why it works. Nevertheless many hotels in DXB have dropped their rates to get the placed filled. The fix costs if the hotel is full or empty are the same, so better to have a full one earning less than having a half-empty one which barely cover the fix costs. Remember the phrase: It's better to earn 15% of something than 60% of nothing" Most of the Gulf cities are complexed and have the problem that they are always comparing themselves with DXB. They should rather innovate instead of copying. Place concepts, services and attractions which are unique, and you will have the business. Copy what has already been done and you will be compared by price! It's a simple rule in every business. I pay around $ 250 in a very good 5*Hotel in Dubai and on my business visits to Qatar, I prefer to fly from DXB in the mornings and come back in the evenings, rather than paying $400 for a room of the same standard and having very little to choose from if I want to go out and have fun. The flight does not even cost the difference in price. Not to forget is that Business in Qatar is also much smaller (in territory) and can easily be done in one or two days so no need to check in and out for one or two days. Innovation and not trying to be the "better Dubai" is the only way they will be able to keep their prices up, but this is not going to happen. They have the cash, but do not have what it takes to do it!

Posted by: doha-citizen
15 Apr 2012
I entirely agree with Javier's comment above. It s very bad practise for the industry to commonly agree among doha GM's to keep prices up artificially, while there is nothing that can justify these price levels in such a city. The sentence from the W Hotel GM says it all: ?If we start dropping our rates and it becomes a rate war the only one that wins is the consumer". This bubble will explode ...

Posted by: JB RARE
15 Apr 2012
The unforturnate problem is that months ago, all the big banks, contractors and pricey name hotels ect... hedged and projected far more rooms to be sold then the saturated market will bear. And they supposed that their quarterly pay back notes would be worthy, with a particular profit margain figured in based on occupancy and room price,'Wrong'.Now their backs are against the wall and this 2100 more rooms may not break their backs, but the strain and lack of cash hurts everybody, forcing drastic measures like 'Price Wars. The good news may be if all the "City Fathers" of Doha could see their way clear to give Tourism and business travelers a chance, they will find more rooms filled. Tourism is also good for all the merchants in the community. A family out side the UAE will not want to visit Qatar and spend $300 to $600 a night for a vacation. So moderation and "Thinking outside the Box" are in order. Develope a tourism model and give Dubai a run for the money!

Posted by:
2 Sep 2012
Thanks for the above opinions and advices, but, why don't you say it is a battle of survival between all the hotels, specially the Five and Four stars hotels. this war has beed started by the Five stars hotel when they started to reduce their rates based on the budget business traveler who are the majority of Doha Guests. and that by default effect the four stars hotel share of the cake. we all know that Doha is a corporate market not a leisure one. to reduce the five stars hotels rates to be equal to the four stars rates will make it a real war of survivor. rates must be planed, rates must be having a minimum criteria not to go below for all the five, four and the three stars hotels. that if you want to safe the hotels future.