A five-star hotel in Dubai is to offer people the chance to bid for rooms in an online auction, as a way of enticing guests as the city's hotels are hit hard by the global economic downturn. The Monarch hotel on Sheikh Zayed Road plans to launch the "name your price for luxury" auction next month, with rooms, meals and spa treatments on offer.
Arshad Hussain, the director of business development at The Monarch, said the hotel was reluctant to keep dropping its rates and enter a price war with its competitors to attract guests, so it opted for more innovative marketing strategies. "In a recession, it's a very easy thing for hoteliers to keep discounting rates," Mr Hussain said. "Very soon they'll be selling at cost price, or below your break-even point.
"In 2010, the market will come up. If you keep dropping your rates, when are you going to increase them? In London, after [the Sept 11 2001 attacks in the US] a lot of hotels started dropping the rates. It took them three years for them to increase the rate to the same level as pre-9/11." Revenue per available room (REVPAR) in Dubai fell by more than 40 per cent in Dubai last month, to Dh517 from Dh867 in the same month last year, according to data from STR Global.
Occupancy levels fell to 67 per cent from 78 per cent. In the first five months of the year, REVPAR for Dubai was down 36 per cent compared with last year. Analysts have attributed this to a decline in demand from key source markets and an increase in the supply of rooms, as Dubai continues to open new hotels. "Dubai's performance is deteriorating," said Alex Kyriakidis, the global managing partner at Deloitte Tourism, Hospitality and Leisure.
Mr Hussain said The Monarch had focused on tapping new markets, such as the GCC and India. As a result, he said occupancy rates had been boosted to 61 per cent last month. The hotel has also signed up to Facebook, which Mr Hussain said was proving effective. "The auction model is a very smart move on the part of the hotel," said Rohit Talwar, the chief executive of industry consultants Fast Future Research.
"Firstly, it helps them stand out from the crowd when most others are focused more on cost cutting. Secondly, they can control the lower limit and the number of rooms they need to sell via auction and the price in a much more dynamic way." Mr Talwar said the concept was not totally new and sites such as Priceline.com had for some time been offering auctions for hotel rooms around the world. Mr Hussain said people would even have the chance to bid for the hotel's ultra-luxury suite, The Monarch Suite, which this month hosted Paris Hilton and normally carries a price tag of Dh49,000 a night. "Give it a try. Someone can try for a lower rate and who knows, it might be accepted."
A few other hotels in Dubai, including the Palm Jumeirah's Atlantis, have signed up to Facebook as part of their marketing strategy. Mr Talwar said that it was extremely important for hotels in Dubai to embrace social media, as customers increasingly focused on sites such as Facebook and Twitter. firstname.lastname@example.org