The UAE's travel and tourism sector is projected to create 23,600 additional jobs in 2024 to reach a total of about 833,000 jobs this year, with the outlook remaining strong despite the continuing Israel-Gaza war, according to the World Travel and Tourism Council (WTTC).
That is up 2.9 per cent from last year and 14.7 per cent from 2019 before the pandemic that decimated the sector worldwide, the global tourism body said on Thursday in its latest UAE Economic Impact report.
Tourists to the UAE are expected to increase their spending during visits to the country that is home to the world's tallest building, iconic luxury hotels and an outpost of the Louvre museum in Abu Dhabi.
International visitor spending in the UAE is projected to grow 9.5 per cent year-on year to reach nearly Dh192 billion ($52.2 billion) in 2024, the WTTC data shows. Meanwhile, domestic visitor spending is forecast to increase by 4.3 per cent to stand at Dh58 billion.
The UAE travel and tourism sectors' contribution to the national gross domestic product in 2024 will reach Dh236.4 billion, representing 12 per cent of the total economy, the WTTC data shows. The sector's estimated contribution to the Arab world's second largest economy this year is a 7.6 per cent increase from 2023 and up 23 per cent compared to 2019.
The UAE's travel outlook is buoyed by the ease of travel through its airports, "sensible" visa policies, diverse tourism offerings, greater opportunities for business travel and the expected return of Chinese visitors to the country in larger numbers this year, Julia Simpson, the WTTC president and chief executive, told The National on Thursday during a trip to Abu Dhabi.
"The UAE is really knocking it out of the park in terms of attracting visitors," she said.
"In 2019, Chinese visitors were the third-biggest visitors to the UAE, then they dropped off the top five. I'm sure they’ll be back this year," she said, citing gradual improvements in China's airline capacity.
The UAE in November 2022 announced an ambitious national tourism strategy that aims to raise the sector’s contribution to the GDP to Dh450 billion by 2031, with an annual increase of Dh27 billion. It also targets attracting 40 million hotel guests by 2031 and Dh100 billion in tourism investment to the UAE.
Dubai International Airport (DXB) has retained its crown as the world's busiest international hub for passengers for a 10th consecutive year in 2023, as long-haul travel demand continues to boom, preliminary data by the Airports Council International (ACI) showed. DXB handled 86.9 million passengers in 2023, a 31.7 per cent increase on the previous year.
Dubai also recorded its best-ever annual tourism performance in 2023, with international tourist arrivals to the emirate increasing by 19.4 per cent annually to 17.15 million, according to government data.
The WTTC's 2024 outlook comes as the UAE's travel and tourism sectors grew by more than a quarter last year. They contributed a record-breaking Dh220 billion to the UAE’s GDP, or 11.7 per cent of the economy, according to the latest WTTC data.
The sectors' economic contribution in 2023 grew 26.4 per cent year-on-year and 14.3 per cent on 2019 levels, the WTTC said.
Last year, the number of travel and tourism jobs in the UAE grew 5.3 per cent to 809,300, representing one in nine jobs in the country.
After the UAE travel and tourism jobs that were lost during the Covid pandemic in 2020 were fully recovered in 2022, the sector jobs have increased 11 per cent in 2023 compared to 2019 levels.
Domestic visitor spending in the UAE fully recovered in 2022 and grew 8.9 per cent last year to reach Dh55.6 billion. This is 38.2 per cent higher than 2019.
International visitor spending surged by 39.3 per cent in 2023 to reach Dh175.2 billion, which is 12.1 per cent above 2019 levels, as the UAE continued to develop as a global tourism destination, the WTTC said.
A decade of growth
Over the next decade, the UAE's travel and tourism industry is projected to employ more than 928,000 people across the country, with one in nine residents working in the sector, the report said.
The sector will grow its annual GDP contribution to more than Dh275 billion by 2034, representing about 11 per cent of the UAE economy, it said.
The UAE’s economy has continued to expand amid government initiatives to diversify away from oil with an emphasis on growing priority sectors such as manufacturing, tourism and technology.
The UAE Central Bank has increased its 2024 growth forecast for the country's economy to 5.7 per cent, from 4.3 per cent previously, it said in December.
Middle East tourism outlook
Meanwhile in the Middle East, the WTTC expects travel and tourism sector's GDP contribution is set to reach $507 billion in 2024.
The Israel-Gaza war is a "terrible human tragedy", and in terms of its impact on tourism-dependent economies, it has most affected Palestine and Israel as they are directly involved, and countries immediately surrounding the conflict zone such as Jordan, Ms Simpson said.
"The conflict is a terrible tragedy. In tourism terms, it hasn’t spread around the Middle East. There are strong tourism numbers in Saudi Arabia, UAE and Oman. Egypt is also doing well."
Countries outside the immediate zone of the conflict are not included in travel advisories and airlines are maintaining strong flight connections, which are giving travellers confidence to visit the region, she said.
Asked about the impact of escalating geopolitical tensions between Israel and Iran on regional tourism, Ms Simpson said the situation is "not dampening desire for people to visit the broader region" but that it is "something to keep an eye on".
The proposed single GCC tourism visa is "a smart move" that will allow smooth travel between the six-country bloc and help boost tourism numbers, Ms Simpson said, comparing it to the success of the Schengen visa in Europe.
"That visa facilitation will be very positive," she said.
Sector jobs in the region are forecast to reach 8.3 million, international visitor spending is projected to stand at $198 billion and domestic visitor spending is expected to hit more than $224 billion, the WTTC said.
This comes despite the Israel war in Gaza approaching 200 days on April 24, with devastating humanitarian and economic impact in Palestine. Israel's bombing has killed more than 38,899 Palestinians, displaced most of Gaza’s 2.3 million residents and razed large areas of the enclave.
Geopolitical tensions further increased after Iran attacked Israel on Saturday in retaliation for the Israeli strike on the Iranian consulate in Damascus, on April 1. Israel said it has decided to respond to the Iranian attack.
The Middle East and Central Asia's economy is forecast to grow 2.8 per cent this year, according to the International Monetary Fund's latest report in April. This is a slight downwards revision from the fund's January expectation.
The Mena region's GDP is forecast to rise to 2.7 per cent in 2024, a “tepid” increase from 1.9 per cent in 2023, the World Bank said in its April report.
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Uefa Nations League A Group 4
England 2 (Lingard 78', Kane 85')
Croatia 1 (Kramaric 57')
Man of the match: Harry Kane (England)
Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
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COMPANY%20PROFILE
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COMPANY PROFILE
Name: Rain Management
Year started: 2017
Based: Bahrain
Employees: 100-120
Amount raised: $2.5m from BitMex Ventures and Blockwater. Another $6m raised from MEVP, Coinbase, Vision Ventures, CMT, Jimco and DIFC Fintech Fund
COMPANY PROFILE
Name: Kumulus Water
Started: 2021
Founders: Iheb Triki and Mohamed Ali Abid
Based: Tunisia
Sector: Water technology
Number of staff: 22
Investment raised: $4 million
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Director: Ahmed Moussa
Starring: Ahmed El Sakka, Amir Karara, Ghada Adel and Moustafa Mohammed
Three stars
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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Tips on buying property during a pandemic
Islay Robinson, group chief executive of mortgage broker Enness Global, offers his advice on buying property in today's market.
While many have been quick to call a market collapse, this simply isn’t what we’re seeing on the ground. Many pockets of the global property market, including London and the UAE, continue to be compelling locations to invest in real estate.
While an air of uncertainty remains, the outlook is far better than anyone could have predicted. However, it is still important to consider the wider threat posed by Covid-19 when buying bricks and mortar.
Anything with outside space, gardens and private entrances is a must and these property features will see your investment keep its value should the pandemic drag on. In contrast, flats and particularly high-rise developments are falling in popularity and investors should avoid them at all costs.
Attractive investment property can be hard to find amid strong demand and heightened buyer activity. When you do find one, be prepared to move hard and fast to secure it. If you have your finances in order, this shouldn’t be an issue.
Lenders continue to lend and rates remain at an all-time low, so utilise this. There is no point in tying up cash when you can keep this liquidity to maximise other opportunities.
Keep your head and, as always when investing, take the long-term view. External factors such as coronavirus or Brexit will present challenges in the short-term, but the long-term outlook remains strong.
Finally, keep an eye on your currency. Whenever currency fluctuations favour foreign buyers, you can bet that demand will increase, as they act to secure what is essentially a discounted property.
