HRRAC calls for a halt to price war

CEBU, Philippines - Once again, the Hotel, Resorts and Restaurant Association of Cebu (HRRAC) calls for a halt to the ongoing price war among city hotels.

"We don't need to kill each other [in terms of rate], we have the demand," said HRRAC President Cenelyn Manguilimotan calling on hotel operators in the city to maintain a "healthy" environment amid tough competition.

Manguilimotan, who is also the general manager of Parklane International Hotel Cebu, said the oversupply of rooms in Cebu, which is now nearing 5,000 excluding accommodations in Mactan Island, is prompting hotel players to lower their rates and introduce attractive promotions during lean months.

Although, outsmarting each other in terms of promotions is part of the business, she appealed to the bigger chains "not to step on smaller players' toes,"so as not to lose their market.

As an organization, Manguilimotan said HRRAC cannot do something about the "price war," but if players will be sensitive enough to keep a healthy industry, reasonable pricing and market dictated prices shall be implemented based on their size and category.

About 70 percent to 80 percent of hotels and resorts in Cebu are locally owned and operated, meaning they don't have the support of bigger chain operation.

"Hotel is a very expensive business. Operational cost is very high," said Manguilimotan adding that for a hotel to stay in a break-even business it has to reach a 55- percent average occupancy rate.

With more hotels being built up and opened,  Manguilimotan said there is a much needed call for Cebu to bring in more tourists, "room lost a day, is a revenue lost."

At present, the average standard room rate in Cebu ranges from P2,500 to P2,800 per night. She said some big hotels on the other hand occasionally offer much lower rates via promotion, and if done frequently this could kill the smaller players, she stressed.

While the oversupply of rooms has resulted to "price war," which is unhealthy for the industry, Manguilimotan is also calling the help of the government both local and national agencies to forge a more stronger relationship with the private sector in promoting Cebu as leisure and business destination. (FREEMAN)