Event review: Hotelier Express 2017 advisory panel
Five leaders in the Middle East’s mid-market hospitality industry convened at Rove Trade Centre, Dubai to discuss relevant issues facing the sector
Five leaders in the Middle East’s mid-market hospitality industry convened at the Rove Trade Centre in Dubai to discuss relevant issues facing the sector, with the hoteliers’ insights helping to set the 2017 Hotelier Express Summit agenda.
Demographics vs psychographics: what to deploy in targeting today’s travelLers? how vital is a customisable digital strategy for mid-market hotels?
Paul Bridger: You just cannot put people into boxes anymore. We say we are digital natives, a digitally connected brand. We see people from 18 to 80 years old. You need to understand that when people are travelling for business and the company is paying and they’re staying for a week, they’ll choose a very different hotel from when they go on a staycation with their wife.
Ghada Mahgoub: I think you need to combine both. You need to base on preferences. You have to target these customer preferences and adapt your hotel services
Remmie De Graaf: People also don’t like the feeling of being put into boxes. They want things customised especially for them. That changes even for one guest, because they travel all the time and for different purposes. They come for business but also with the family and will have different needs for each trip. Hilton has been very active in catering to that new generation of travellers, changing the Hilton Honors programme and booking channels, implementing digital key and online check-in. In the US, this is already implemented and is due to come to the Middle East. As for online bookings, you need to have a user-friendly app.
Pawel Guminski: I think this is the future. We have no choice. We have to explore and embrace the digital world, starting from mobile-friendly applications and websites. Google announced recently that they will be downgrading content that is not mobile-friendly and rewarding mobile-friendly websites by putting them higher in search engine results. According to research, conversion from a mobile-friendly website is 88% higher. Another thing they are looking at is the type of content – it’s no longer just about pretty pictures – now the content these days is about video and real time. Look at the popularity of Facebook Live, Insta Stories and Snapchat. It’s endless. Hoteliers can use this for their ‘now or never’ promotions, using a limited time promotion code where you only have a short time to use that code and then it’s gone. And virtual reality – this is something to watch out. At the moment, it has 50 million users and in a year’s time, will have 100 million users. It’s limitless. Soon we will be living in a world where people will be visiting a hotel room from their chair and this is how they will decide to book.
Bridger: Funny you should mention that – we just launched a 360 viewing app for our hotels and it does allow you to come and visit our lobby, our rooms. The feedback has been great. I think the journey for a lot of people starts and ends with social media. You want to see what your friends recommend, which brands are talking to you. You might look at TripAdvisor. And it finishes on social media because you want to share the time you’ve had, where you stayed, so it relates back to that branding.
Guminski: And it’s all happening on your mobile. The trend these days is to get mobile or get left behind. It’s not just hospitality, it’s across the board. We have to plug into it or we get left behind.
Mahgoub: We are looking at doing a mobile app. And virtual 360 is also something that we are looking to do at Time Hotels.
With the growth in mid-market hotel supply, how are you coping with pressure on rates?
De Graaf: The growth in the past year in RAK has been tremendous; there’s been a very strong focus on high-end resorts up to the luxury and now, the mid-scale segment with the Hilton Garden Inn and a couple of other brands following shortly within the next year and a half. The trend that you see happening in Dubai, with the rate decline, is already something that is starting to happen in Ras Al Khaimah. Where do you end up with a five-star hotel and a four-star hotel from a price perspective? I think there you might have some challenges. Although I think mid-market resorts can work but it needs to be defined clearly in which lane they are going to swim.
Bridger: In Dubai while you see a decline in rates, obviously you still see some of the best occupancies in the world. We’ve announced that we’re going into long-stay with the launch of Rove Home. We’re working on a long-stay concept and potentially we think this has the ability to go into different segments. Again within the next six to 12 months, we’ll probably be announcing a next generation Rove. We think Dubai has a big market for long-stay, lifestyle, affordable accommodation.
De Graaf: Overall, the ADR is a challenge for low seasons like what we have right now in the summer, it’s more challenging. The gap between mid-scale, upscale, upper upscale and even up to luxury is shrinking. A lot of the luxury and upscale are not swimming in their lanes and that puts a lot of pressure on us – the mid-scale.
Mahgoub: This is definitely happening especially in areas like Barsha where you have the upscale, five-star hotels pricing themselves like a four-star hotel. With many rooms available, customers can pick where they want. There is pressure for us mid-scale operators. Especially when you consider the number of hotels opening in the area and the rates that they are offering.
De Graaf: In the last few years where you see multiple brands coming into a destination, the focus from a regional office is destination marketing or destination positioning. So we really need to make sure that our hotels are positioned in the right way as well. Otherwise you will end up with a Waldorf competing with a Hilton Garden Inn. At the end of the day, that should never be the case because they have their own brand identities. So pricing should be purely done on a positioning perspective as well as a marketing perspective.
Siegfried Poppe: Yes, pricing is normally done against comp set.
Bridger: At Emaar, we’ve got well defined brands so we don’t really experience that price pressure. I think you stick to your brand and you stick to your positioning and pricing strategy.
Poppe: I think if you look at citywide numbers of ADRs, you need to look at it in two ways: one is that the additional supply which comes to market, there is a lot of mid-scale. So if you take the total ADR of the city, and you have more mid-scale in the city, the overall ADR in the city will drop because there’s more production of a lower-rated segment. That’s part of it. And then for sure, you have the traditional opening rates trend. Which affect the market because obviously if you’re an established property and you haven’t renovated the past five years, you will suffer from it because you need to go after these customers. But I think established products with solid offerings have enough to hold their rates. There is no need for a catastrophic image. We just said, Dubai has one of the highest occupancies in the world, highest ADRs in the world, so it’s still a very strong performing city. It was the wish of the government for the city to have a lower rate so it becomes more affordable and stable in the right way because it drives more business from various segments and travellers. It’s more sustainable for the city – otherwise you are all milking from the same cow. I think it’s very healthy that other mid-scale brands are entering the market. We’ve even got new supply coming from entry level hospitality models and I think it just completes the image for Dubai as it moves towards maturity.
Guminski: It makes Dubai more affordable. Instead of being just a luxury destination, Dubai can now be for everybody, with budget airlines, mid-scale hotels. It’s also the demand. People that couldn’t afford the destination before, now they are coming to town.
Poppe: On the flip side, there are also changes in the way we operate, changes in the way authorities are looking at us. I think there are a couple of consequences coming into the landscape where you cannot operate anymore a traditional model of a five-star luxury structure. How are the regulatory authorities looking at the new supply that’s coming? The customer trends are changing – how are they adapting? The authorities in Dubai are very attentive to the market; they look at changes and they act on it, for example, opening up specific source markets, bringing more business to the destination. So I think it will also be interesting to hear their part.
The VAT implementation – how to deal with it and its impact?
Guminski: We’ll have to absorb it. You can’t pass this on to the customers. There’s a talk apparently between DTCM [Dubai Department of Tourism and Commerce Marketing] and hoteliers about a way of incorporating VAT into existing charges. We had a meeting recently where there was talk about putting it on top of the tourism dirham. We don’t know how it’s going to go or when it will start. It will change the profitability model for sure. The reason why we’re here is because we’re still making money. I think the luxurious hotels had a really good time in Dubai before mid-scale showed up in the market. And our products, we are really stepping up so that’s why the people’s perception of mid-scale hotels is also changing. When you think of mid-scale before, it always seemed a bit tricky. Now, when you walk into a mid-scale hotel, apart from the absence of a concierge – you don’t really feel the difference.
De Graaf: I think this is something that we will try to put on top, not to absorb it. That’s the direction we want to go – where the learnings about the implementation of the service charge, the implementation of the tourism dirham, can be applied. In the end, it was absorbed and accepted. Is the market willing to absorb and take that next step again? That of course is the difficult part. But by giving in straightaway and saying, ‘we absorb it’, from my perspective, is not the right way to go.
Poppe: I think we might go with a mix between the two. What you usually do with contracted rates is put it on top, usually an easier sell from what I’ve seen in other countries. And then you’ve got customers who book online and that’s where you have a mixed bag. You price what you price online, right? And there you’re going to have some factor of absorbing it. That’s why I think it’s not just one way. For sure it will drive up the city rate.
What other issues affecting mid-scale hoteliers should be included in the agenda for Hotelier Express Summit 2017?
Bridger: It would be nice to have the perspective of DTCM about the ‘Dubai 2020’ vision and the methods and ways that mid-scale hoteliers can do to support the vision. Employee engagement is another good topic as it is related to Dubai 2020. Also, it would be good to touch on benefits and career opportunities for mid-scale hoteliers. VAT implementation should be on the agenda as well.
De Graaf: We should talk about what we can do in educating the market: what is a mid-scale, the differences between upscale and mid-scale and managing the guest expectations, which is sometimes unrealistic because people don’t understand what we are trying to achieve.
Poppe: We need to talk about the industry talent pool with DTCM and the authorities. The industry depends so much on importing talent. There are not enough hotel schools and the burden of education is on the hotel companies.
De Graaf: Again, education. This should also touch on a sense of pride among hotel employees about working in mid-scale. There are even more opportunities, with different products and different value propositions. I fundamentally disagree that luxury is a superior place to work. It all depends on where the employee works best.
Additional coverage of the Hotelier Express Summit 2017 Advisory Panel can be found on www.hoteliermiddleeast.com/hotelier-express.
Hotelier Express would like to thank the members of the Summit Advisory Panel 2017:
Time Asma Hotel, Dubai general manager Ghada Mahgoub
Rove Hotels director of operations Paul Bridger
Hilton Garden Inn Ras Al Khaimah general manager Remmie de Graaf
Premier Inn Dubai International Airport Hotel & Premier Inn Al Jaddaf general manager Pawel Guminski
Smartotels Hospitality International chief operating officer Siegfried Poppe
Hotelier Express Summit 2017
Wednesday, 22nd November
Grosvenor House, Dubai, UAE
A one-of-a-kind event that brings together hospitality professionals from across the Middle East’s midlevel, budget and serviced apartment market to discuss and debate the unique challenges and opportunities this sector possesses. The Hotelier Express Middle East Summitprovides the ideal forum for hoteliers to step back and reflect on how they are going to tackle key operational challenges, meet customer expectations and boost their bottom line.
For event registration or speaking opportunities, contact Louby Maktari, conference producer:
Tel: +971 4 444 3578
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Tel: +971 4 444 3246