Industry exec warns vs. price war

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Tuesday, July 15, 2014


RATHER than damage each other’s business in a price war, a top official of the Hotel Resort and Restaurant Association of Cebu (HRRAC) is urging hotel players to be united in selling Cebu as a destination to continue attracting tourists.

“We don’t need to kill each other (in terms of rates), we have the demand,” said HRRAC president Cenelyn Manguilimotan. She appealed to hotel operators to “respect each other’s rates” and maintain a “healthy environment” amid competition.

Manguilimotan said city hotels are cutting their rates in the face of increased competition, especially during the lean season. The increase in number of rooms has prompted hotels to review various options to compete.

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Cebu now has close to 5,000 rooms, excluding accommodations in Mactan Island. About 70 percent to 80 percent of hotels and resorts in Cebu are locally-owned and operated.

Rate parity

Although, outsmarting each other in terms of marketing promotions is part of the business, Manguilimotan noted that there are some new players in the hotel industry that don’t understand what they are getting into. She said some don’t know how to deal with rate parity or how low or high they can go in terms of hotel rates. This, she said, adds to the tension in an already competitive industry.

“What is even alarming here is the fact that even big hotel players are starting to chase the market of small players,” said Manguilimotan, who is also the general manager of Cebu Parklane International Hotel.

Manguilimotan said HRRAC, as an organization, cannot do something about the price war.

But if players will be sensitive enough to keep a healthy industry, reasonable pricing and market-dictated prices should be implemented based on their size and category, she said.

One solution to stop the price war among city hotels is to bring in more tourists to Cebu so every player will get a good share of the market.

“Hotel is an expensive business and operational costs are high. Rooms lost a day is revenue lost,” she said. “Hotel players should support one another and be united in selling Cebu as a destination.”

Solutions

The average standard room rate in Cebu ranges from P2,500 to P2,800 per night. For a hotel to break even in business, it has to hit at least a 55 percent average occupancy rate. HRRAC has over 60 member hotels.

The organization is also hoping to strengthen relationship with concerned government agencies and local government units in selling Cebu as a destination. She said they are having hard time pushing participation of hotel members during sales missions due to late invitations.

Manguilimotan said it would be a great help if the Department of Tourism provides the industry the list of activities for the year, including sales mission schedules, ahead of time so they can prepare and include them in their budgets.

Published in the Sun.Star Cebu newspaper on July 16, 2014.

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