The call for an industry respected minimum room rate for five-star hotels in Abu Dhabi is being made by Francesco Borrello, general manager of the city’s landmark Abu Dhabi Grand, soon to be re-branded Le Royal Meridien Abu Dhabi.
Borrello says that the age-old trend of selling on price is the wrong strategy for premium hotel products, as ultimately it is service standards that suffer, hence bad for the guest and for Abu Dhabi’s reputation as a world-capital.
He suggests that an agreed minimum pricing strategy among the city’s six, five star hotels is the mature route to ensuring the customer is not disappointed by a below-par product. “This can be delivered beyond expectations but not at a Dh 200 ($55) per night market, which can happen here in Abu Dhabi at certain times of the year. Operating costs just cannot be contained at this level. We must aim for Dh 500 ($135) and beyond.”
Looking at average room rates for the last quarter of 2002, Abu Dhabi stands at around Dh 340 ($93) per night on an average occupancy nudging 58 percent. This rate is almost level-pegging against Dubai’s upscale city properties but some Dh 100 ($27) behind the assumed average rate achieved by the emirate’s five-star beach properties. Average occupancy in Dubai, across the city and beach resorts, hit 80 percent.
Elsewhere in the Gulf, Qatar, with just four, five-star properties, managed Dh 465 ($125) for an average occupancy of almost 65 percent. Meanwhile, the price cartel-managed destinations of Bahrain and Kuwait achieved the best rates, with Bahrain peaking at around Dh 500 ($135) and Kuwait at Dh 790 ($215). Occupancies averaged out in the mid 60s, despite Ramadan, traditionally a low period for in-bound business travel.
Price cartels in compact markets driven by the hotel operators themselves are a known tool in the hospitality sector and are generally managed by a third party ‘auditing’ body to ensure that codes of ethics are respected by all alliance members. Bahrain has made good use of an audited cartel to sustain the development of a superior five-star hospitality product for almost a decade. While, Kuwait’s upscale hotels implemented a productive price cartel in the mid nineties. — (menareport.com)
© 2003 Mena Report (www.menareport.com)
