Arrivals continue to surge as UAE expands its touristic projects
Tourism year in review: Travellers remain enamoured with the UAE's offerings
The tourism sector in the UAE is all set to reap benefits of the change in the emirate's visa policies, increased flight connections and the roll-out of mega projects as the second-biggest Arabian Gulf economy seeks to cement its position as the most popular destination in the broader Middle East and North Africa (Mena) region.
Tourist arrivals are set to rise in 2018 , buoyed by travellers converging on Dubai, one of the top commercial and business hubs of the GCC which accounts for more than half of all inbound travel to the country. Dubai received a record 11.58 million visitors in the first nine months of this year, a 7.5 per cent in increase from a year-earlier period, with the emirate’s top three source markets – India, Saudi Arabia and the UK – maintaining their spots.
The growth numbers for the emirate, which is on track to reach the 20 million visitors a year target by 2020, are pretty much in sync with the global average. Destinations around the world received 1.1 billion visitors in the first ten months of this year, up by 7 per cent from the same period last year, according to the World Tourism Organisation.
Meanwhile, Abu Dhabi is also on track to surpass last year’s figure of more than 4.4 million hotel guests after it welcomed in excess of 4.3 million hotel guests in the first 11 months of the year. The emirate is on target to reach a record 4.9 million guests by the end of this year.
“Key factors impacting tourism performance this year was visa on arrival policy offered to many countries during the year… especially, from China and Russia, which are important source markets with higher average spend by the tourists,” said Rabia Yasmeen, an analyst at Euromonitor International.
“Rising disposable incomes followed by growth of middle income consumers in developing countries such as India and Pakistan is giving rise to aspirational tourists for whom travelling to the UAE is both process-friendly as well as cost-efficient.”
The UAE is undertaking mega projects such as Dubai’s Expo 2020, building theme parks and museums and developing more hotels to help attract a greater number of tourists as part of plans to wean its economy off oil and generate alternative lines of revenues to bridge the fiscal deficit. The diversification efforts are paying off with projections of continued growth in tourist arrivals.
According to Euromonitor, inbound arrivals to the country are estimated to reach beyond 22 million visitors in 2017, a growth of 4.8 per cent that is expected to be replicated in 2018. BMI Research, a unit of the Fitch group, however has a more conservative estimate of 19.8 million visitors for 2017 and 21.1 million 2018. The research group is forecasting tourism receipts of US$33.5 billion for 2017 and $37.9bn for 2018.
“A number of factors will drive growth in the market including sustained economic diversification efforts, heavy infrastructure projects investments and the ongoing effort to attract global and regional holidaymakers and business travellers alike,” said BMI in a research note. “ Visitor numbers are growing rapidly and the UAE benefits from a relatively diverse inbound travel market which brings some stability to the [tourism] market.”
There were a number of significant milestones achieved this year and more will crossed in 2018, which will help solidify the UAE's position as a tourism hub.
Abu Dhabi opened the Louvre in November, the second such museum in the world, with much fanfare and the authorities are working on finishing the Guggenheim Museum. The Dh3.7bn Indoor theme park attraction Warner Brothers World Abu Dhabi is set to open next year on Yas Island.
In Dubai, DXB Entertainments is forging ahead with building a Six Flags theme park set to open in 2019. It will be the third attraction in addition to the exiting Motiongate, Legoland Dubai and Bollywood Parks Dubai.
These developments will also help drive associated hotel sector's development in the UAE, particularly mid-scale establishments to cater to the needs of tourists in the middle-income bracket .
“Looking at demand, India and China remain major growth markets in 2017, and the expectation is that this will continue throughout 2018,” said Ali Manzoor, an analyst at consultants Knight Frank. “Given the growing middle class, increasing flight connectivity, and physical proximity to both markets, it is likely that we will see the development of quality internationally branded mid-scale hotels that cater to this segment.”
But the continued supply of new rooms is also putting pressure on rates. For example, occupancy across Dubai in November fell 2.7 per cent year-on-year to 87 per cent as supply rose 5.6 per cent and demand edged up 2.7 per cent, according to data provider STR Global. The revenue per available room or RevPar – a key gauge of industry's health – fell 3.8 per cent to Dh655.84. There are over 29,000 rooms under construction in Dubai, and more than 4,000 in Abu Dhabi, according to STR.
“Dubai has seen a levelling out in terms of performance that has seen a drop in rate over the last few years, primarily related to the amount of supply being added to the market,” said Marko Vucinic, senior vice president and acting head of Hotels & Hospitality Group Mena at broker JLL.
“In general we see the investment returns (IRRs) softening across the key markets in UAE (Dubai, Abu Dhabi). In response, developers are looking into ways to differentiate themselves by reassessing their product offering.”