Officials deny new hotel pricing policy

Theodore May
4 Min Read

CAIRO: Members of the Egyptian Hotel Association and the Ministry of Tourism denied news reports that they had set regulations allowing hotels to reduce their prices by 20 to 25 percent from October 2009 to October 2010.

According to an article in Al-Mal newspaper and notes in investment bank Beltone Financial’s daily market report, the Hotels and Tourism Entities Chamber announced a new pricing policy that allows tourism entities to freely determine their rates, provided they are not 20-25 percent lower than previous rates, to enable hotels to deal with the repercussions of the global economic slowdown.

Enforcement efforts are also underway to insure that all foreign tourists enjoy the same rates.

However, Hala El-Khatib, secretary general of the Egyptian Hotel Association, said, “We have an annual pricing strategy. .There was nothing like this issued.

“We would not do that, echoed Tourism Ministry spokesperson Omayma El-Husseini. “It goes against our strategy.

El-Khatib noted that “this is a free market and that hotels are free to price their rooms as they please, which includes reducing prices to encourage business in the face of the global economic crisis.

She added that the Hotel Association has always maintained strict quality standards.

“The only thing we have to maintain is that a hotel cannot decrease its quality of service, she said.

If hotels want to reduce prices, she said, they can’t cut quality. If they do cut quality, they’ll be held to account by quality control inspectors sent periodically around by the government.

Disclosing all the controls the government exercises over hotel pricing, El-Khatib said that each year, hotels submit to the Ministry of Tourism what’s referred to as the rack rate. That rate is the maximum a hotel can charge for a room. The ministry then weighs the proposed rack rate against the hotel’s quality before approving or rejecting the figure.

Going further against news reports, authorities said that reducing prices would cause long-term harm to the hotel industry. Many hotel bookings for foreign tourists are done as part of package deals.

When, after the economic crisis, hotels try to raise prices, they would face heavy challenges from these bargain hunting travel agencies.

“It would take six years for them to increase prices back to normal levels, said El-Husseini.

El-Khatib did confirm part of the Al-Mal story, though, which noted regulations on price discrimination for foreign tourists.

She said that after receiving a considerable number of complaints from tourists visiting from the Gulf states, the Hotel Association put its foot down on the practice.

“We issued very strict restrictions and warning to hotels telling them not to set prices based on nationality, she said.

Those restrictions, El-Khatib said, were issued at the beginning of July.

Despite assumptions to the contrary, the tourism industry in Egypt appears to have shown greater resilience than many expected it to.

According to a report issued by Beltone Financial, revenues are expected to drop from $10.8 billion in the 2007-2008 fiscal year to $10.5 billion in the 2008-2009 fiscal year, which ended in June.

This better than expected performance is a far cry from the fear that spread in the wake of the Tourism Ministry’s reports that revenues between January and March 2009 had fallen by 17 percent.

Analysts have long predicted that the Egyptian tourism sector could rebound quicker than other sectors as travelers begin to recognize Egypt as a less expensive travel destination.

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