Middle East limited-service hotels in ‘fashion’

While luxury hotels slash rates to stay out of the red,the financial downturn has made three- and four-star properties a natural choice for consumers, according to Holiday Inn Dubai general manager Reda Moukhtar.

“Surrounding five-star properties are offering three-star rates, but  we’re still able to compete because mid-market hotels are in fashion,” said Moukhtar.

“No-one is looking for five-star hotels, businesses in particular want to be seen as saving money during the downturn,” he added.

Moukhtar’s comments were echoed by Premier Inn managing director Darroch Crawford, who said limited-service hotels were “very much the flavour of the month” in the Middle East.

“People are looking to save costs and the mid-market hotels offer everything needed for a good night’s sleep. In the luxury hotels, you have five-to-six staff members saying ‘good morning’ to you, but you’re paying for that,” asserted Crawford.

“As clients become more educated on value for money, they’re becoming more loyal to limited-service brands and are realising it is not a compromise on quality; it’s taking responsibility and cost saving,” he added.

In response to luxury hotels drastically dropping rates, Premier Inn properties in the region slashed rates by up to 30%, but in spite of the challenging summer Crawford said the hotels had “seen more business this year than last” and was “encouraged for the winter”.

Furthermore, InterContinental Hotel Group’s (IHG) interim results for the first half of 2009 to June 30 (H1) support Moukhtar’s observations, with the company’s mid-market hotel brand, Holiday Inn, showing more resilience than luxury brand InterContinental worldwide, for example.

The InterContinental brand showed a 9.4% fall in occupancy (to 60.8%) during H1 when compared to the same period in 2008, while Holiday Inn fell only 7.5% (to 54.6%).

Similarly, average daily rate (ADR) for InterContinental fell 8.4% (to US $158.10), compared to a 5.2% drop (to $93.04) across the Holiday Inn properties, and InterContinental’s revPAR fell 20.7% (to $96.13), while revPAR for Holiday Inn hotels only dropped 16.6% (to $50.79)

However, while Holiday Inn was more resilient, overall results showed the company’s luxury brand InterContinental continued to perform better in terms of higher occupancy, ADR and revPAR.

With thanks to : http://www.hoteliermiddleeast.com

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