Time for hoteliers to take it to the next level
With a predicted hotel bulge fast approaching, hoteliers in the UAE will need to find a way to protect their investments to survive - let alone thrive - in this oversupplied and competitive market.
As up to 29 more hotels open, many linked to bold projects such as the Guggenheim in hot spots such as Abu Dhabi, potential guests are spoilt for choice. What's more, these customers are also savvier, and competitors are more aggressive, which makes attracting and retaining tourism and business dollars even more challenging.
Every new and existing hotel in an oversupplied market is vulnerable and at risk. Hoteliers invest millions of dollars in location, décor and marketing. Although the physical elements help to attract customers, they can only do so much. Today's guests visiting the UAE consider a convenient location, high-quality dining and appearance the minimum standard.
The hotel industry strives for and grows on elusive repeat customers, and while hoteliers consider industry statistics such as revenue per available room and occupancy rate, they often overlook the most significant key component that drives them - people.
Gallup research found the hotel team (front and back of house) is one of the most significant primary drivers in determining the guests' experience - and whether they recommend or return. This satisfaction is quantifiable and drives income along with, more importantly, sustainable repeat business. The key to long-term success in this expanding and evolving market is creating an emotional connection to the brand and property, which helps to guarantee repeat business from every guest who steps through the door.
When customers feel engaged, they spend more on food, beverages and other activities at the hotel. This additional revenue is vital to a new hotel location or an existing location under pressure from its new neighbours. But it is not only the customers who need to feel engaged, the hotel employees must as well.
One of the biggest challenges for the UAE within every industry, particularly in hospitality, is engaging talent. The National recently reported that one in four UAE employees felt completely empowered in their workplace, which effectively means that three quarters of the workforce feel they do not have the freedom to make decisions, nor the time, training, materials, equipment, support and "voice" to do so.
This is a significant risk in roles dealing directly with customers, a primary component of any hotel team. Investing in the engagement of these teams is imperative to ensure every customer interaction is the best possible and that problem resolution is seamless, making it a simple choice to recommend and revisit that hotel.
In addition to increased competition within a small market such as the UAE, new hotel locations dramatically increase the level of available jobs in the market, putting pressure on existing hotel locations where team members may be unhappy with the engagement and empowerment within their roles.
With any new entrant, existing operators may lose valuable staff members, and consistently in the market this leads to a reduced pool of readily available local talent. Research indicates that turnover can cost organisations a loss of 30 per cent to 176 per cent of the annual salary of each vacant position, particularly at locations where employee engagement is poor.
The additional costs associated with managing, recruiting, training, the disruption of services and diminishing team cohesion all contribute to a quantifiable loss. This can be a difficult number to swallow in a challenging and competitive market, and have a disastrous effect on the high level of quality and service customers expect.
UAE hoteliers operate in a unique situation, with a culture, business environment and history that is driven by hospitality. The opportunities for innovation are endless. Hoteliers (both local and international) must operate beyond the traditional hard facts of dollar investment, and begin investing in the human elements of the hotel experience. In a market with increased supply, and potentially reduced demand, the focus must shift to engaging customer and employee interactions, maximising the opportunity from every single "touch point" to provide a significant competitive advantage and prevent key attrition and associated costs from rocketing out of control.
Vipula Gandhi is a senior consultant at Gallup Consulting Middle East & Africa
Published: February 24, 2012 04:00 AM