Price wars bad for industry: Hotels, resorts urged to work together to increase the market

With more hotels and resorts trying to get a piece of Cebu’s booming tourist market, Hotel, Resorts and Restaurant Association of Cebu (HRRAC) chief is calling on everyone to refrain from engaging in price wars.

Engaging in a price war will only “kill” all of us, said Cenelyn Manguilimotan, HRRAC president in an interview last Friday.

“We don’t need to kill each other by pushing our rates lower. We have enough traffic for everyone,” said Manguilimotan.

She said Cebu is going to enjoy high traffic with two major events happening here like the Asia-Pacific Economic Cooperation (Apec) Summit next year and the International Eucharistic Congress in 2016 to be held in Cebu City and which Pope Francis is likely to attend.

As of last week, the HRRAC has confirmed four meetings to be held in Cebu next year which will involve at least 5,000 delegates.

She identified the hotels and resorts as Shangrila’s Mactan Island Resort and Spa, Movenpick Hotel, Cebu Parklane International Hotel, Radisson Blu Hotel and Waterfront Cebu City Hotel.

These hotels and resorts are already booked for the meetings and accommodation of the delegates.

She also said smaller hotels can benefit from these activities as those who are part of the delegates’ entourage can be billeted with them.

Manguilimotan, however, admitted that presently, there is an oversupply of rooms in Cebu, which is estimated to be close to 5,000 rooms and this does not include the resorts in Mactan Island.

The lean months have caused these hotels and resorts to come up with promotions and lower their rates to attract clientele.

“Take for example if a major hotel drives its rates very low reaching the level of the smaller players. Of course, the clients will book with the bigger one. This creates problems — a domino effect and price wars happen,” she said.

Manguilimotan is urging the bigger players “not to step on the smaller players’ toes” and instead work together to increase the market.

“That way we can all tap into a bigger market and not kill each other. As an organization, we cannot do anything about this but to just make everyone understand that price wars will only make things worse,” said Manguilimotan,

She said some hotels and resorts are practicing unwise ratings which may cost them their business in the long run.

“As much as possible we want available rooms so that when the market grows we are ready. Some hotels only charge according to their present operations which is not healthy. You must think forward, include in your rates your renovation cost because for a hotel to survive, it needs to be constantly updated,” she said.