Hotel industry must adopt proactive approach to drive sustainable growth,
urges HOFTEL CEO
- Hoteliers need to do more than slash rates to support long-term health of the market, says respected industry commentator
- Oversupply just one of the issues up for discussion at GIOHIS 2019
The region’s hospitality sector needs to invest in new, proactive strategies in order to thrive in an increasingly competitive market, which is set to see supply climb to record levels in the next 12 months. Potential approaches, which can avoid a “race to the bottom” on prices, will be among the key talking points at the Gulf and Indian Ocean Hotel Investors’ Summit 2019 (GIOHIS) in Abu Dhabi on 4-5 February.
With another 30,000 new rooms set to create a supply glut in Dubai and large pipelines in Abu Dhabi, Muscat and Saudi Arabia, hotel owners who embrace change and take advantage of opportunities specific to the market conditions will be the best equipped to deliver long-term growth, says Simon Allison, CEO of hotel owners’ alliance, HOFTEL, and organiser of GIOHIS.
He says: “There is a big temptation during a period of oversupply for hoteliers to focus on price reductions alone to attract customers, but a multi-faceted approach is much more likely to help them emerge more strongly when conditions improve.”
Allison believes that hoteliers who focus solely on cutting rates risk devaluing their brand equity in the long-run because customers will be reluctant to pay more when conditions improve.
Allison says other key actions hotel owners should consider in order to see their brand through the current supply spike include:
- Seeking out new market segments, especially from India, China and Africa as well as South East Asia
- Reviewing their cost structures to see where fundamental changes can be made; that may include looking closely at their management agreements with operators to ensure the brand is fulfilling all of its obligations
- Reviewing their space use. Could restaurants do better as meeting rooms or visa-versa? Is there space to rent out some of the ground floor or even the parking? Can the GM’s office make way for a saleable suite?
- If they can afford it, using the slow market as an opportunity to do renovations. They will be displacing less paying business and contractors’ prices will have fallen if the glut of property really bites.
- Considering a move from a management agreement to a franchise (especially if they have three or more properties and can benefit from internal economies of scale). Similarly, independent hoteliers may find it worth considering a move to a well-known brand.
Dealing with the oversupply ‘crunch’ is just one of the major talking points that will be discussed in detail at GIOHIS 2019. Others include:
- Franchising – is now the time?
- The Chinese are coming and can transform the inbound market, but what do they want?
- Timeshare comes to the UAE – good news or bad for the sector?
- Can the Saudi ‘tourism revolution’ succeed – and who wins and loses if it does?
- Changing investment opportunities as resort and leisure markets mature
GIOHIS (Gulf and Indian Ocean Hotel Investors’ Summit) will bring more than 250 of the top hotel owners, developers and operators from the Gulf, East Africa, the Indian Ocean islands, ASEAN and Australia together to discuss topical issues affecting the industry. Being run by hotel owners’ alliance HOFTEL, rather than a commercial media or conferencing company, means that GIOHIS can be upfront about addressing the sector’s key issues in a transparent and compact forum full of decision-makers.
This year, GIOHIS will take place at the Park Hyatt, Abu Dhabi, with an evening reception at The Louvre, Abu Dhabi. For more information and to purchase tickets, please visit https://giohis.com.