April 03, 2012

AED 99.00 Hotel Room - Dubai, UAE: Real profitability?

What can you get for AED 99.00 in Dubai?
A one way airport transfer, a buffet breakfast, a 24-hour Internet access, a deal from Groupon  / Cobone for a 1-hour spa in a standalone business units, a 2-hour dhow cruise.....etc

Well, you can actually get a Hotel Room at the Jebel Ali Easy Hotel, that is located inside the JAFZA. With a mere of corporate international companies in that areas (Maersk, Dubai World Port, Unilever, Naffco), it is surprising to see a double digit hotel room rate, in that area and also in Dubai. And the good news, you can book up to 9 rooms.

Jebel Ali Easy Hotel: AED 99.00 Strategy
So for distressed corporate clients with low budget, the good news is that this AED 99.00 rate at Easy Hotel is not only available during Ramadan, but it seems to be the first Best Available Rate of their pricing structure, and it's also available during high and peak seasons (October and November). So is Easy Hotel Revenue management piloted by a system like their sister business units Easy Jets? Also

Talk: Crystal Bowl -  Tell me the right price for Dubai Summer Prices in 2012?
As industry professional, we are all expecting to see Dubai hoteliers entering the battlefield price arena, for releasing their public Summer prices as low as AED 99.00-199.00. Since the Tour Operator / DMC and Travel Agents, needs to be protected and markup their rate, we are looking easily at an addtionnal 20-25% discount on those rates. Does it really make sense, when looking at the historical data on the last 05 years, when Dubai hotels are still performing comfortably on RevPAR.

We know that some leading 5-star on Sheikh Zayed Road and Festival City/Airport areas can offer group rate deal as low as AED 300 Net with Taxes and Breakfast Included. If 5-star hotels price at that level, then what do you expect 3 and 4-star hotels to sell at?

Perform your mathematics and cost structure

With the constant increase of utilities cost for Dubai Hotels (DEWA, Gas...) along with structure cost (Maintenance / renovations), how can those hotels deliver profitable operations?

I would recommend that the Financial Director get involved in the Summer sales tactical and forecast, because I have seen many hotels in Dubai, running 100% on Summer and generate a loss on their Profit and Loss statement. So does this makes sense to provide full efforts, and not turning on profitability?

Running a business, it is crucial to gain a net income / profits from your operations. If there is no profits, clearly there is no salary to the owner.

Rahul @ RSVP - Hospitality

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