How could hotels survive?

Lot's of reasons.
Money laundering operation.
They don't pay their help a living wage.
They are barely surviving or losing money.
No one said it has to be easy.

We took a group of School children on a day trip to the Allegro in Playa Dorado - Adults day pass - 1000 pesos, Children 12 and under- 500 pesos, 2 and under free. There were 55 children, 5 infants, 26 adults (axctually only 8, but 18 teenagers - 13,14, and 15) There were in the buffet about 12 tourists in the whole place. Talked to several couples from Canada and they were very pleased with the lack of crowds and very happy that our group of youngsters were well behaved.

LaLouve said:

Hello Ladies and Gentlemen,

We booked our tickets to revisit the North Coast and roam the country. While very happy to escape from the harsh weather (believe it or no, it has snowed few flakes about an hour ago), I keep asking the same question. How could the AI hotels survive? For instance if you book a flight from Mtl to POP including a week stay at an AI for $900 cad. What portion goes to the airline company and what goes to the hotel chain? What profit margin do they have after paying salaries, food and other expenses?

To the moderator, I didn't know where to start this thread.

Have a great afternoon or what's left of it,

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Most operators in the DR have a client base that's local, to cover for their operating costs and expenses. To this sector the rates are much more enticing and only in DR$ currency. This helps to cover the operational costs during the low season as well as creating a solid pattern of support for competition. Local travel agencies are the main operators of the packages sold to the nationals.

The foreign clients are fresh meat for the plucking... The main dish and dessert if you wish to make it a little graphic...

Dont forget, locals pay by far more per day than any tourist does, anything from 70-100 Us per day per person, no way you could get that from a tourist on a package trip.

PICHARDO said:

Most operators in the DR have a client base that's local, to cover for their operating costs and expenses. To this sector the rates are much more enticing and only in DR$ currency. This helps to cover the operational costs during the low season as well as creating a solid pattern of support for competition. Local travel agencies are the main operators of the packages sold to the nationals.

The foreign clients are fresh meat for the plucking... The main dish and dessert if you wish to make it a little graphic...

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Do you really believe what you write. Show me an AI that can even break even (except for Holy Week) with local business. The fact is most hope to just keep the doors open so they don't have to lay off all the help. But cover expenses????

East cost --it's completely, 180 degrees reversed to what Pichardo says: most AI hotels (resorts) survive off foreign tour operators and local business is the "dessert". It helps them minimize loss (or in best case scenario break even) in off-season months (September through December, and May-June). For that reason, local rates are WAAAY higher than any foreign tourist pays. Many times what locals pay for 2-nights stay, foreigners pay for the whole week. I have wholesale account with several major European tour operators, including Thomas Cook, and I know what contracted rates are. I even have several direct contracts with several resort chains, like AMResorts (brands Dreams, Secrets, Now), and I know what rates for European markets are, for resorts both in the DR and Mexico. I tell you, Europeans pay peanuts compared to the local market. Then tourists from Latin America follow, then Canada and USA is last (most expensive)...but the most expensive of all, is the DR local market.

Now one thing - the cheapest hotels run specials in some periods for local market, that approximate the local rate to receptive (European) rate. But you don't see such rate approximation with mid and upper chains. Hotels like Majestic, Melia, Bahia Principe, Ocean, Barcelo Palace Deluxe, etc. DO NOT approximate local rate to receptive rate at ALL. When you THINK you are getting a great deal with local rate, receptive rate is even MUCH MUCH cheaper. Hotels do specials with EBB (early booking discounts) which I have seen to "extend to bookings made today for tomorrow" so technically it's no early booking, free upgrades, 7 for 5 (7 nights pay 5), etc. So when there is a promotion for local market, receptive rates are even more discounted.

I will give you an idea - right now (october), my cost for Occidental Grand Punta Cana is 37 dollars per person, per night. Receptive rate. It sells in Europe for about US$50 PPPN. Check for how much local rate is going, with the "promotion". I'll give you an anwwer - it's about 65 dollars pppn.

luzcace said:

Dont forget, locals pay by far more per day than any tourist does, anything from 70-100 Us per day per person, no way you could get that from a tourist on a package trip.

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Not a chance. Local Dominicans pay USD$35/day for Casa Marina for all-inclusive. Local gringos pay about USD$75.

Dont think they sell a day to locals for 1300 pesos per day, and no way they receive this time of the year 35 Us from any touroperator. A day pass for an AI is about that

In the Hard Rock Hotel in Punta Cana locals pay about 35% less than anyone else. If you don't believe me go there with a Cedula and see the price you get.

You are talking about walk in price, I am talking about what the hotel receives for a tourist from a package trip.

you all seem to forget something. Those tour-operators reserve and pay for x thousand rooms per year/season, and therefore get a fantastic rate. It is up to them to be able to sell them. Hence the fantastic rates you can sometimes book.

LaLouve said:

Sky, no a friend of ours who drove us around the country and with a cedula (over 25 years in the country), when we insisted for him to spend the night instead of driving from Cabarete to Santo Domingo and we insisted to pay for his room, it was $90 at the Viva Wyndham. He tried to get a better price not that money was an issue,, but no was the answer.
Luzcace,ok. Sorry for mispelling your alias earlier.

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I said the Hard Rock in Punta Cana. I can't speak for other hotels.

i don't get it, you speak about a day pass (fairly cheap) or a night in a hotel (expensive)?
i am not sure about local/turista rates. if booked in advance via agency the room rates will be cheaper, yes. but if a turista walks in from the street side by side with a dominican they should get the same price.

SKY said:

In the Hard Rock Hotel in Punta Cana locals pay about 35% less than anyone else. If you don't believe me go there with a Cedula and see the price you get.

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Tell me the price you get and then I tell you the price I can get as a tour operator. Then we'll see. Those two will be far far away...and TO rate will be on the lower side.

A friend of friend of mine (Dominican) bought a stay for a (local) wedding in Hard Rock. The local group rate she was offered was substantially higher than what "I" was able to sell her on receptive rate and still make a decent commission on the stay.

belgiank said:

you all seem to forget something. Those tour-operators reserve and pay for x thousand rooms per year/season, and therefore get a fantastic rate. It is up to them to be able to sell them. Hence the fantastic rates you can sometimes book.

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Yes and no. I have great rates and no volume requirements. How about that?
Nowadays, the majority of hotel chains operate on "market rate parity" basis. Meaning my contract based on my German address gets access to the same rates as TUI, Thomas Cook, REWE and other big German tour operators get. The difference between us is that they buy at bulk and I buy on as-go basis. The difference is they have confirmed rooms for sold-out periods and I have on-request rooms. So when the hotel is full, they still may have rooms available while I don't. That's the only advantage of bulk buying, in many hotel chains there is no rate difference between a small guy and big guy (yes! unbelievable). The sell-out affects mainly peak travel times for short-notice bookings. Very few times had I reservation not confirmed. The chains that work with market rate parity policy are AMResorts, H10, BeLive, Fiesta (but you have to guarantee them 300 room-nights per year (200 the first year), not a difficult thing it's about 40 bookings, Occidental and Princess.

How SOME tour operators operate is by leveraging EBB (early booking bonus). Hotels give up to 35% discount off contracted rates for early bookings. For example EBB till 31 December, settlement till 31 January for stays 1 January through 31 march. For European and Latin market this is great because people plan winter vacations around fall-time. Hence, large tour operators take advantage by buying bulk rooms, so they get 20-35% discount off contracted rate (any tour operator, small or large can do that). Then, they sell rooms to clients. As arrival date approaches, they do "last-minute" offers, many times selling the room at cost or with small margin of profit only. So yes there is the "bulk" advantage of big tour operators. But these offers are for certain dates only and cater to people who can "travel on the fly". So I can offer same competitive rate as TUI for clients who book 2-3-4 months in advance (and even lower because I don;t need that big of a margin). However, for last-minute travel big tour-operators can offer great deals, simply because they need to get "rid of" the EBB-booked rooms.