The UAE’s private education business environment is more challenging than ever. More new schools opened their doors in 2019 at a time when a sluggish economy forced many expats and their families to leave the country.
Schools were already losing profit margins in a saturated market when the COVID-19 crisis compounded their financial challenges. With the emergency measures taken and the move to online learning, most schools reduced third term fees anywhere from 20% to 50%.
Some did so proactively while many others were nudged by the MOE or finally succumbed to pressure from parents. In addition to tuition, many schools also refunded fees for buses, cafeteria food, cancelled activities and other services. As more expats are forced to leave the UAE and return to their home countries due to this crisis, student numbers will continue to drop and pull school revenues down with them.
If schools manage to find a way to protect current fee levels for 100% online learning scenario this September, then that’s less pressure on their top line, but they will need to increase investment to deliver quality that everyone will accept. The more likely outcome if online learning continues into the new academic year is that pressure from parents will force schools to reduce fees even further.
Don’t expect parents or regulators to be satisfied with mediocre quality in this scenario. Regulators have already started assessing the quality of online learning in the UAE, and this could eventually become a standard component of annually published school assessments. Schools will have to demonstrate top-notch distance learning or risk losing students. With the prevalence of distance learning, transfers will be easier than ever when parents don’t need to worry about how far a school is and where schools can serve many more students as they become less restricted by physical space.
For both scenarios, costs will either increase or change significantly, and bottom lines will be hit hard.
Read our recent Gulf Education Sector Whitepaper for more information and ideas about driving a cost optimization initiative at your institution.
About the Author: Hatem Mahdy, from straightforward continuous improvement and efficiency projects to more complex organizational development interventions, Hatem partners with his clients on a rewarding journey of exploration and learning in pursuit of sustainable strategic outcomes.