Russian visitor decline impacts pay packets

21.5% of Salary Survey respondents said decline in Russian tourists has had negative effect on wages

Russian visitor numbers to Dubai decreased by 23.5% in 2014 compared to 2013 figures.
Russian visitor numbers to Dubai decreased by 23.5% in 2014 compared to 2013 figures.

The Hotelier Middle East Salary Survey 2015 results are in, and 21.5% of the survey’s 527 respondents claimed that the decline in Russian visitors to the region — as a result of the fall of the Russian rouble — has impacted salaries.

The Dubai Annual Visitor Report, released in early May, revealed that Russian visitor numbers to Dubai decreased by 23.5% in 2014 when compared to 2013 figures.

Alison Grinnell, director- Hospitality and Leisure, PwC said: “In Dubai we’re forecasting negative growth in occupancy and ADRs – some of that is a knock-on effect of the Russian market and the Euro depreciation and also with the amount of supply coming onto the market,” she said.

Streamlining staff costs to cope with poor performance is a trend picked up on by many of the survey respondents, one of whom commented: “If owners get greedy for more money and the market is not strong enough, cost reduction measures are forced onto hotels.

“This reduces training, demotivates and stops recruitment of talented people whom could potentially generate more revenue. There are a lot of potential revenue opportunities, however these are long term, not immediate. I believe owners require quick returns within the year.”

Some respondents commented that a decline in Russian guests has impacted service charges in particular.

TRI Consulting senior consultant Chris Hewett said: “I think the only way it could have an impact is through lower service charge distribution. With the Russian market drying up that has an impact on that. Direct salaries no, but indirect benefits, I think so.”

However, some respondents directly blamed the resulting hit on profits from the declining Russian market for pinched pay packets.

One respondent said: “Less revenue means prices have been cut to attract other markets,” while another stated: “I don't expect an increase due to decreased revenues”, and one more said: “The domino effect of market conditions has led to change in strategy of the hotels dealing with Russian market”.

Other participants said: “The market of CIS is down, the hotel was CIS reliant” and “It is too early to say whether a pay rise is affordable or not, given that stretched budgets have to be met”.

His Excellency Helal Saeed Almarri, Director-General of Dubai Department of Tourism and Commerce Marketing (DTCM) believes that the number of Russian visitors to Dubai will level out by the third quarter of this year, however.

“I would expect 2015 to be more of a stabilisation year with Russia, so I think by the third quarter we will have seen most of the readjustment from that market.”

PwC’s Grinnell added: “In 2016 that story becomes much more positive and we’re seeing significant RevPAR growth across Abu Dhabi, Doha, Dubai, Jeddah, Riyadh and Muscat.

“By the time we come to 2016 we’ll see some green shoots with the Russian market returning but I think for Russia, the New Year is going to be more of an indicator of whether that is really back to the levels predicted.”

The Hotelier Middle East Salary Survey is carried out annually and the 2015 survey is its seventh edition.

With 527 hoteliers completing this year’s survey, it was the most comprehensive Hotelier Middle East Salary Survey ever carried out.

For all the latest hospitality news from UAE, Gulf countries and around the world, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page.

Most Popular