A planned luxury hotel on Manama's seafront, for example, had been associated with Oberoi for at least four years, but shortly before the time of going to press, the owners had been looking for another operator. A tower hotel under development on Dubai's Sheikh Zayed Road still has Park Plaza's name on the hoardings, but is reported to have been signed over to Sheraton in February. The chains are increasingly having to accept harsher conditions in order to secure management contracts. For operators, life is only likely to get harder. Travel Trade News Middle East wrote in December last year that of over 36 properties in the area, at least 15 have retrenched staff and taken measures to drastically cut operational expenses.
Some hotels are unable to pay their staff full salaries.
The problem in Riqqa is not just that there is intense competition for business, but that many of the properties are leased to operators, rather than managed on contracts like the five-star hotels. Rahim Abu Omar is general manager of the safely owned and operated five-star Metropolitan Palace Hotel in nearby Maktoum Street. Yet despite this heavy commitment, their income is based on room rates which must be set at rock-bottom levels to match those of the competitors. The four-star hotels in Dubai petitioned the Department of Tourism and Commerce Marketing to help them by either fixing minimum room rates, or to stop new building in the Riqqa area. The pleas of the Riqqa hoteliers were gently but firmly rejected, although the DTCM did agree to guide investors in what type of project they should put up in future.