DUBAI – TOURISM RESILIENCE DESPITE REGIONAL ISSUES

Dubai continues to enjoy strong growth in international tourist arrivals, stimulated by demand from Asia, neighbouring countries of the Gulf as well as Russia. A trend which should continue in 2017.

Times should have been more difficult for the Emirate in recent years due to the instability in the region, rising Islamist terrorism – which discourages some travellers to spend holiday in the Middle East, and the destination becomes less financially attractive as the local currency is pegged to a rising dollar.

However, these negative elements did not seem to play a role in the evolution of the Emirate’s tourism.  From January to November 2016 (latest available data), Dubai welcomed 13.34 million foreign travellers, up by 3.9% over the same period of 2015.

Asian travellers grew the most from January to November 2016 with the strongest growth rates recorded for the Philippines (up by 19%), Pakistan (up to 18%), China PRC (+15%) and India (+11%). The latter is now Dubai largest source market at 1.59 million travellers followed by Saudi Arabia with 1.53 million arrivals (+7%). The two other Dubai inbound markets generating over a million travellers a year are the UK (+4%) and Oman (+10%).

However, tourist arrivals decreased in countries such as Germany and the United States (-1% for both), Egypt (-5%), Australia (-12%), Jordan (-13%) and Nigeria (-17%), the worst performing market over the first 11 months of 2016.

Average length of stay remains flat at 3.6 nights compared to 3.7 nights a year earlier.

A good evolution is the decrease in hotel rates thanks to a competitive hotel market. According to data from Dubai Corporation of Tourism & Commerce Marketing, the average room rate in the first 11 months of 2016 reached AED503 (US$137) compared to AED562 (US$153) for the same period of 2015.

Dubai represents 70% of all hotel capacities in the UAE with 101,502 rooms at the end of November 2016. The Emirate is now looking at favouring the construction of budget and middle-class hotels to respond to demand from emerging markets such as China, India or Pakistan.

Dubai represents some 70% of all hotel capacities in the United Arab Emirates with a total of 676 establishments – offering for the first time over 100,000 rooms in supply for the year. Occupancy stood at 78%, one point more than in 2015. December – which generally generates the highest occupancy rates in year – should help lifting the results of the hotel industry for the entire year 2016.

According to a report of consulting cabinet SRT, Dubai hotels reported a 9.1% demand growth for the last month of the year. The occupancy reached on average 79.1% with three consecutive days at over 90% while rates rocketed at AED824.58 (US$224.50), still down by 8% compared to the same period of last year. December 2016 turned to be the best performing month since 2011.

Over the years to come, hotel rates should grow moderately as supply continues to grow on average by 5% to 6% a year. With Dubai hosting the World Expo in 2020 and having a target of 20 million travellers by 2020, the focus for hotel development will be on economy and midscale hotels. Earlier last year, Dubai introduced tax incentives for budget hotels. They are running until the end of 2017, according to authorities.

dubai-figs-2016Dubai Tourism’s hope is to be able to attract new emerging markets from Asia as well as mid-class travellers from China and India. In that sense, Dubai is following the steps of iconic but artificially created tourism destinations such as Las Vegas or Phoenix in the United States or Pattaya in Thailand. One to three-star hotels represented 267 hotels with 21,951 rooms, or 21% of the total capacity during the first eleven months of 2016. Additionally, Dubai offers 139 standard hotel apartments offering another 15% of all capacities.

Dubai evolution is likely to spill over the entire region with Abu Dhabi, Oman or Fujairah likely to open more to mid-class travellers. At the end of November, there were 97 hotels offering 26,889 rooms in construction in the United Arab Emirates while Qatar sees the construction of 36 new hotels with 8,748 additional rooms.

 

ARTICLE BY LUC CITRINO