Middle East hotels faces challenge

Hotels in the Middle East are been urged to plan for the worst-case scenario as the credit crunch continues.

Hotels in the Middle East have been urged to plan for the worst-case scenario as the credit crunch continues to take hold of the global tourism industry. Despite healthy occupancy rates in the UAE, a new report released yesterday by the US-based International Society of Hospitality Consultants (ISHC) has advised hoteliers around the world not to panic and to start planning how to minimise the impact of the recession. "It is more than just cutting costs," said Jerry Morrison, the author of the report. "Don't close the marketing department. "Consider imaginative, rate and package development strategies. Study your guest history to determine the purpose of their visits to your property. Identify competition so marketing efforts are not misdirected." The Middle East has been one of the tourism industry's strongest performers in recent years. Last year, the region recorded the largest percentage increase in the world, surging 13 per cent to 46 million arrivals, the UN World Travel Association (UNWTA) said in its 2007 annual report. Yet much of that growth has come from visitors from developed economies such as the US and Europe, and both regions are expected to be particularly affected by the economic slowdown. "It's a critical time for hotels all around the world," said Roland Obermeier, the vice president of sales and marketing Middle East and Africa at Kempinski Hotels in Dubai. "Right now, hotels in the Middle East have to work twice as hard and twice as fast to maintain market share." Tarek Lotfy, the regional revenue director for the Middle East and North Africa at Golden Tulip, a Dutch-Swiss hospitality group in Sharjah, is concerned panic in the market might hurt the industry's revenues. "Once the rates are dropped, it would be very difficult for the market to go back to their current prices. "It's true that in some cases some hotels are overpriced, but a drastic cut in price levels wouldn't do the industry any good," he said. Plans for Middle East hotel developments hit a record high at the end of the first quarter of this year with the announcement of 527 projects providing 155,989 guest rooms, according to a report by Lodging Econometrics, based in the US. So far, 233 projects containing 66,775 rooms are under construction. "In our case here in the Middle East, I believe that the negative economic slowdown will have a one- to two-year impact on the hospitality business and we will no longer see the extraordinary levels of growth as projects will be delayed," Mr Obermeier said. [e-mail]