UAE education firm aims to bust myth surrounding high school fees

The head of an education firm in the UAE insists investors who think they will make more profit by opening glamorous schools in Dubai and charging high fees are misguided, writes Megha Merani.

GEMS group chief operating officer Dino Varkey told 7DAYS: “It’s because they don’t understand the models. Actually, return on investment, whether a school is affordable or expensive, is consistent.”

Speaking in Dubai on the sidelines of the Education Investment MENA conference this week, Varkey added: “It takes seven to eight years to get your equity back. On a typical enrolment cycle, your first dollar of net cumulative profit is from year nine onwards. I think the general perception around the world is that higher fees equates to higher quality. That’s a misconception because most people’s perception of the traditional private sector actually only refers to the very expensive, elite private schools that you see typically in developed markets.

“The reality is that emerging markets have already gone so far beyond in terms of innovation in new private-sector models.”

An investment expert reaffirmed Varkey’s statement. Ashwin Assomull, partner at The Parthenon Group, told 7DAYS: “Dino is right. It’s true. A school at a lower price point can make as much money - and sometimes more money - than a [school at a] higher price point.” He explained: “Imagine that in a very high price-point school you have to offer expatriate teachers and the greatest facilities, so your cost of delivery is higher. So a higher price point doesn’t necessarily mean higher profit.”

Varkey stressed that the choice to send kids to a higher- or lower-priced school ultimately belongs to parents. Asked why he thought parents opted for expensive schools, he replied: “Because it’s personal preference. People choose. Why would you choose to buy one car over the other? It’s a choice.”

He explained: “There will be some parents who opt for more expensive schools that have a TV studio, parents who want their children to speak three modern languages, that want their kids to be exposed to 140 extracurricular activities. Whereas in an affordable school, what does a parent want? They want a good-quality education for their child, so their child can make a better life for themselves than they have.”

One parent, who has a five-year-old daughter who attends the Raffles World Academy, told 7DAYS: “We’re paying about Dhs40,000 in fees. It was an easy decision because my husband’s company is paying it. We figured as they’re paying we may as well pick a posh school with all the facilities, such as pools and tennis courts - plus it’s close to where we live and we had no trouble getting admission.

“We’re not unhappy with the school, but if we had to pay that amount out of our own pocket I doubt we would. As far as the quality you get for the fees, I don’t think any school here is worth the thousands they get away with charging.”

GEMS boss Varkey said he wanted to make it clear that students are not getting a lower-quality education by going to a less expensive school. He said: “If you judge it on results, absolutely not. We’ve never believed that. It’s unfortunately perception. Let’s take my case, for example. I do not send my son to our most expensive school. I send him to one of our Indian schools, because it’s personal choice.”

Dr Abdulla Al Karam, director and chairman of the Knowledge and Human Development Authority, added: “There is no scientific correlation to prove this. If your cost is high, it does not mean that you are high quality. This is one of those myths I want to bust.”

Read more: http://www.7daysindubai.com/UAE-education-firm-aims-bust-myth-surrounding/story-19975542-detail/story.html