Hotel rates drop as occupancy levels soften

Some Dubai hotels have become willing to haggle with customers over room rates as the economic crisis hits visitor numbers.

DUBAI-AUGUST 4,2008 - Tourist enjoys watching old wooden boat docked in Dubai creek in Baniyas road Dubai. ( Paulo Vecina/The National ) *** Local Caption ***  PV Tourist 1.JPGPV Tourist 1.JPG
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Some Dubai hotels have become willing to haggle with customers over room rates as the economic crisis hits visitor numbers. Many already boast drastically reduced rates at what should be one of the busiest times of the year. An informal survey by The National found many were ready to reduce rates further if the customer negotiated. After only a few minutes' bartering, rates were cut by between 7.4 per cent and 12.5 per cent. Some hotels lowered rates by a few hundred dirhams a night, or agreed to include extras such as breakfast. Of the 12 hotels contacted, five were willing to reduce their price or alter the terms of the deal on offer. All were asked for the price of a standard double room for one night on Friday, Jan 16. All were called five days beforehand. Andreas Brauer, a consultant with PKF, a Dubai property and tourism consultancy, said: "In Dubai, there was always more demand than there was supply, with pricing high compared to other markets around the world. "What is probably going on now is a correction, which comes as a result of what has happened in the market recently." Both the Sheraton in Dubai Creek and the InterContinental in Festival City were ready to knock down their prices by Dh120, from Dh1,140 (US$310) and Dh1,620 respectively. The InterContinental agreed to do so only after saying it would not include breakfast as part of the price. The Movenpick in Bur Dubai and the Novotel at the World Trade Centre agreed to cut their rates by Dh100 a night each, from Dh900 and Dh799 respectively. The best deal was offered by the Millennium Hotel at Dubai Airport, which insisted on keeping its rate fixed at Dh840, but, after negotiation, agreed to include breakfast for two people, worth Dh160. Most hotels, particularly those charging more than Dh1,000 a night, refused to negotiate, although some indicated a degree of flexibility without committing to a discount. Many of the hotels refused to reduce the room rate after admitting their prices were lower than usual for the time of year. A worker at the Holiday Inn in Al Barsha said: "The room is already on a big promotion and is very low so we can't give it even cheaper." Hotels in Dubai have reported occupancy rates of only between 60 and 70 per cent. During the same period last year, hotels were between 80 and 90 per cent full. Abu Dhabi, a popular business destination, has been less affected. Prices for some rooms in Dubai have been slashed by as much as half, and the Dubai Department of Tourism and Commerce Marketing urged hotels to reduce their rates by as much as 60 per cent in exchange for promotion during the month-long Dubai Shopping Festival, which started on Saturday. Almost all the hotels said rooms were likely to be available up to the night in question, and that business was slower than usual. Cindy Yoong, a spokeswoman for the Sheraton Dubai Creek, said negotiating was now "part and parcel of closing a deal". "It's all about supply and demand," she said. "If the hotel is running close to full occupancy we may negotiate the rate based on demand. "We are positive about the future trends. Business on the books, as well as pick-up in the last few days, have shown positive signs." A spokeswoman for the Novotel said: "At the moment, we are running at about 85 per cent occupancy, but we can still drop down [prices]. "Because of the global crisis, there are not as many guests coming. If guests want to negotiate, they can. We don't want to lose guests." The InterContinental said both their sales and reservations teams were ready to negotiate the prices of rooms with clients. Caroline Bremner, the global travel and tourism manager with Euromonitor International, a London-based tourism consultancy, said: "I would definitely say it is surprising that, under not too much force, they drop the rates. "I imagine this approach will work more with domestic visitors or regional travellers rather than international travellers, who tend to book well in advance and in a deal with an airline. It is very, very interesting and good news for consumers if they now have more power. I would definitely encourage people to try this." The willingness to negotiate for hotel rooms reflects developments in Dubai's real estate market in recent months, with estate agents reporting that buyers were ready to put in offers rather than pay the expected price for property.