The complex relationship between hotel owners, operators, and online travel agents is keeping prices higher than necessary and could threaten to undermine the Middle East’s hospitality sector at a time when the supply of rooms is set to reach an all-time high, according to delegates at the Gulf & Indian Ocean Hotel Investors’ Summit.
How the hotel sector can find the right balance for investors, operators, marketers and guests will be among the key talking points at the event.
As the Middle East looks to absorb the largest pipeline of new rooms in the world, the challenge of attracting tourists to fill them is set to intensify over the coming years.
However, the presence of many stakeholders involved in the region’s hotel sector, each of whom takes a piece of the action, is making room costs unnecessarily high, with limited room for improving value to customers.
Simon Allison, chairman of hotel owners’ group Hoftel, which runs GIOHIS, said: “International competition for tourists is higher than ever, so it is essential that Middle East hotels are able to compete on prices or everybody will lose out.
“This is a particular concern as more supply comes to the market, so we look forward to discussing potential solutions during GIOHIS.”
In the Middle East, the vast majority of hotels carry an international brand.
Most guests either book via that brand’s website or, increasingly, they use an online travel agency which enables them to compare hotel deals and make their booking quickly and easily.
Guests have undoubtedly benefitted from the visibility and options presented by booking through online travel agents and from the loyalty programmes of the big brands, but as a small number of companies now dominate these two sectors the opportunities for improving value are diminishing at both ends of the market – for investors and customers.
Allison explains: “The online travel agents don’t own any hotel rooms and most of the brands you see on the building don’t either.
“However, the online travel agents take hefty fees for each room booking and the brands take a slice of revenue and another slice of profit from the hotel owner.
“This increases the relative costs of rooms for customers and yet the owner’s margins are also small, meaning they can’t cut prices.
“There are only two main online travel agents in the world and only a handful of global brands, so they have the concentration of power.”
At GIOHIS 2018, industry experts will discuss the future of the Middle East hospitality sector, and the potential for creating the best outcomes for all stakeholders.
At a session entitled, ‘Coping with downturns and disruptors - do the brands have the answers?’ panellists will debate whether brands can really manage to raise revenues or cut costs for owners in a downturn.
In what is set to be a high-octane session, Olivier Chavy, chief executive of regional giant Mövenpick, and outspoken hotel owner Suchad Chiaranussati, one of the most active real estate fund managers in Asia, will be joined by senior executives from both Booking.com and Expedia to discuss solutions which meet the interest of all parties.