June 23, 2013

Dubai distress room inventory: can Hotel Apartments understand Yield Management correctly?

I am regularly browsing some OTA websites to understand how some hoteliers, front office or general managers would price their hotels during shoulder or low season. As per the DTCM, Dubai Government entity, I thought it was not allowed to sell over the RACK rate to protect consumers, but it seems that this rule is not being respected in Dubai, where crazy and extreme rates applies.

I think Booking.com and other OTA's should cap those rates, in their extranet setup to protect clients/consumers, and to be in line with government tourism authority in the Emirates.

750% Rate Increase for Hotel Apartment - Dubai - Case Study:
A Dubai hotel apartment that sells its 1 Bedroom Apartment, eighteeen (18) times higher than its Studio, that might sounds crazy, but it happens in Dubai, and no one has placed any restrictions so far.

So what makes this hotel apartment so special: gold finishing, large indoor swimming pool, latest flat screen technology, complimentary airport pickup, massage vouchers, free food and beverage, helicopter ride, Burj Khalifa At The Top access....not at all, you will just be entitle for your rooms and a big smile.

Booking.com Hotel Search - June 27 for 1 Night, 1 Adult

A quick review on their company website appears that there are sold out for that period. I can understand that it may be difficult for a hotel to claim back its inventory from an Online Travel Agency, however we recommend a courtesy call to Booking.com market manager should be sufficient enough to close off the room category.

Surprise enough by their rates strategy and decisions, I decided to venture through a Google search for their official website; once retrieved I could browse their online booking rates structure and on alternative days, a regular 1 Bedroom Apartment is generally sold at AED 400.00, and I could not reckon that Air Show, Gulf Food or a citywide event is happening in Dubai on those days.

To protect hotel consumers, I think hotels should by default expose their RACK rate through their online bookings, and this should be monitor by DTCM.

What is RACK rate?
RACK rate is the asking price for a room, the set price which nearly all discounts are calculated.

The hotel rack rate is the maximum that the hotel will charge a person that walk in the lobby without reservation. The rack rate is often printed on the sign of the hotel room door. Many travelers never pay the rack room rate. Some hotels have effectively made their "online rate" their hotel rack rate, but most of the time the internet rate is cheaper.

For Moon Valley Hotel Apartment, when accessing their room rates and availability on alternative days, you will reckon that the One Bedroom Apartment is priced at AED 400.00.

By performing a calculation, the advertise rates on Booking.com should indicate me that the regular price is hike with a 750% markup, that sounds quite harsh.....(not sure the DTCM will favor or approve those initiatives...).

Moon Valley Management should really be aware of those practices and place proper structure to control its pricing, and advertise its public rack rates instead of placing Raffles Dubai Hotel or The Armani rates for its 1 Bedroom Apartment.

Last point, they may want to report to google that a website is hijacking their brands with the following URL:

This type of URL is illegal, see my previous post.

Yield Management  team have evolved tremendously in the last 10 years, and it's important there is a tactical strategy at the hotel or hotel apartment. Yield management should not be define by selling a room at the wrong price at the wrong time for the wrong people.

Let's get back to basics or this business will become too complex to want to be in, unless you are a wholesaler or intermediary that is.

@ www.rsvp-hospitality.com

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