- Thread starter LaLouve
- Start date
How could hotels survive?
Dv8, I do not know if your comment was intended to my response. If yes, Tourist and husband had a room booked. Friend drove tourist and hubby all day. Tourist and hubby would not let friend who drove from 6am in the morning to 10pm at night go back and drive 3 more hours to get to his family. And friend by no means is a sucker, but a well respected businessman, My question was not cheap or expensive, my question how could hotels manage. And if there were rates for locals or residents and a campaign to promote more local tourism. I come from Morocco so I am not even mentioning the facial discrimination. Let's stay on the subject. Thanks! If, your comment was not intended to my response, my apologies.
SHALENA, yes, you are right you never mentioned other hotels.
Several A/I hotels are on the verge of bankruptcy. Some closed, others have not paid mortgage payments nor interest in months. The banks are f*cked. Why do they stay open???
They are not making a profit, that's not the objective. The objective is to cover costs (mostly the airline) to get you here into a place where you will return when prices are not that inexpensive. Plus, when you are here you are spending more money on souvenirs to bring home, booze outside of the all-inclusive and more. All in all, it is reasonable for them to do this because it's all a numbers game. The more people who come here, the more people who will return and spend 'real money.'
It's not through a tour operator it's direct at the Casa Marina counter....and yes that is what they pay. Why do you think the locas pack the place each weekend.
Perhaps, but was your friend Dominican? it's not about having a cedula it's about being Dominican. I don't get deals at hotels because of my cedula either.
Well, even if locals pay 35 Us, which i dont believe, it is still more than what the hotel receives from a tourist.
Later I call Casa Marina to find out the rate.
50.00/pp per day all-in. No dam wonder they're going broke. Try to find a decent room in Santiago or Santo Domingo for that price. My last time at Embajador was over 100 and that was business rate.
Yes, go figure, and for tourists they maybe receive 25-30 dollars pp per day all-in.Thats what the original post was about....how hotels survive.
Local travel agencies sell at 3390 pesos per day (night) for 2 persons, which is US$44 PPPN.
As do I.
Additionally, it's also a matter of marginal profitability. If a tour operator has sold enough rooms to break even, every room they sell beyond that point drops directly to the EBITDA line regardless of the price.
They still profit from the low price.
A resort can do the same calculation.
Yup. That $44 is based on double occupancy. That's an advance guarrantee of $88 a night each for a block of rooms. Without the all inclusive package these rooms usually rent for arount $50 a night for two adults. Throw in and additional $20/pp worth of food and booze (sale guarrantee) and the additional $$ the suckers...I mean guests will spend at the a la carte restaurants, gift shops and premium brand bars not to mention the many 'day tours' and kickbacks...I mean promotional considerations from independent restaurants (Capt Cook with the water taxi), fishing boats, nature tours, dive shops, horse stables, etc, etc, etc and you've got a pretty good racket going with a lot of people getting paid.
Now, hold airfares in blocks from the major connection hubs and you've got the formula for a low cost attraction for those who would otherwise spend their vacations driving to visit Grandma and Aunt Daisy.
To gestimate on which potion of the AI package goes to the hotels and how much goes to the airlines....In September of this year I booked an all inclusive package at Gran Ventana for a week with my signifigant other and I paid $753 (air & hotel) for myself from Ottawa to Puerto Plata...where as his cost was just around $500 (for the hotel with no flight). This was based on the hotel's double occupancy rate etc... I was surprised when I made the booking because I'd assumed that the greater portion would have been the air and not the hotel. My partner was a waiter at an AI in POP for a number of years and yes, they are paid a low salary. The average waiter earns about the equivalent of US $175-$250 per month and is expected to suppliment their income in tips. Many who stay at AI's don't tip the staff and during the low season when there are little or no guests, you can imagine there are little or no tips... etc.. Many of the hotels are not surviving and have closed down to renovate in hopes of changing up the venue in order to attract more business etc...The North Coast has to compete with Punta Cana's more luxurious resorts and white sand beaches and many who go just for beach and don't plan to venture off the resort to explore find the North Coast resorts less attractive. I know lots of travellers who used to go to POP and now go exclusivley to PC because the price is the same and they get more luxury in PC for their $. Hopefully the revitalilzation efforts will help make the North Cost more appealing once again and bolster the economy.
I'm still trying to figure out what the following in bold means:
This helps to cover the operational costs during the low season as well as creating a solid pattern of support for competition.
Once the hotels cover the basic operating expenses, this allows them to budget for what's known as the most intense competition that takes place for clients: Low seasons and dead times.
They do that with locals, not by overcharging them but offering the best deals to local TO over that of TO which work with foreign travelers.
In order for the local TO to enjoy the best deals, hotels make sure to bump the prices for individuals making their own reservations or walk-ins above that of local TO.
Once they got their basics covered, hotels must fight it out in order to create the most enticing deals to foreign TO for tourists. Most TO negotiate packages with hotels during these valley times each year. The smart ones that is...
As far as employees and wages? Just like any other services industry, workers get over 70 to 80% of their income from tips not the wages which are nothing more than basic pay to cover their most basic expenses and nothing more.
As far as local clients VS foreign ones? From our own personal experiences in holdings, Dominicans are higher tippers and repeat customers from 30% to 70% in most cases. They tend to be less demanding and more easy going with operators in cases where alternatives must be offered when something fails.