Flexibility key to avoiding the crunch
Middle East hoteliers believe flexibility will be key during the economic slowdown.
Middle East hoteliers are bracing themselves for the impact of the global economic slowdown, but many believe flexibility will be the key to eventual success.
“In Dubai, we are seeing a little bit of a softening from the larger corporates,” revealed Marriott International area director sales and marketing Middle East and Africa Jeff Strachan.
“They are not actively slowing down their business, but they are talking about it.
“However, the Middle East is the growth market for nearly every industry and let’s face it, you can’t stop the infrastructure being built so companies have to send people here on business.”
Burj Al Arab general manager Heinrich Morio agreed business would be affected.
“I think we will all feel the crunch, there is no question about it, but the question is to what extent?,” he said.
“With the great reputation and following we have built for ourselves over the past 10 years, we feel we are better equipped than many other destinations to weather the storm. There is no question we need to be careful to ensure we remain competitive and that our product is delivering what its price structure implies, but I think we are well equipped.”
Four Seasons regional vice president Bahram Sepahi said occupancy had been impacted by the softening business levels, rather than rates.
“It is hard to quantify as it varies per location,” he said.
“[Occupancy decreases] are certainly single digits and not dramatic — some locations have a 3-4 % softening in the forecasts, perhaps 5-6% in other locations. These are not significant in the year-end performance of the properties though.
“Moving into 2009 I think that softening will continue, albeit in the Middle East, but not on a dramatic scale as it is being experienced in other parts of the world.”
However, Strachan did warn that hotels who relied more heavily on leisure business from source markets impacted by the credit crunch, might start feeling the pinch.
“We don’t have beach properties in Dubai, but for those that do, they might start to be hit and that means they start going after Sheikh Zayed Road business to compensate. As a result, Sheikh Zayed Road will go after Deira business and so on, so there could be a domino affect,” explained Strachan.
“I think we could see hotels competing with one another for business much more than before.” The answer, he said, was for hotels to “get off their backsides” and start being creative.
“We need to be as flexible with our clients as possible – we can’t restrict them and say you can only stay one night or ten nights,” said Strachan.
“I am encouraging all of our hotels to be creative and think outside the box and when we have meetings with tour operators, we ask how we can work with them to stimulate the customer.”
Morio and Sepahi agreed that flexibility was key.
“The biggest challenge is to maintain good business levels and to be flexible enough to react to varying levels of business in terms of managing your costs and the quality you deliver,” Morio added.
“That is really the challenge for every hotelier over the next 18 months.”
“We certainly are not looking to change our business model,” continued Sepahi.
“These are uncertain times and we are not only very flexible but we also work even closer than ever with all of those individuals who need to continue to work with their programmes and clients.
“Interestingly enough I think that leisure travel will continue. I think that people will still plan their trips. We live now in times where personal time and family time are the elements of lifestyle and remain integral to what they do — but to meet their needs we may have to have flexibility in delivering their particular wants and there will be changes.”