Dubai has topped the list of cities with the highest spending by international visitors this year, pulling ahead of Doha and London in the top three places, the World Travel and Tourism Council (WTTC) said.
The Gulf tourism and finance hub has raked in $29.4 billion in international visitor spending so far this year, overtaking Doha where tourists spent $16.8 billion and London with $16.1 billion, WTTC said in its latest Cities Economic Impact report.
The cities that have recovered best, compared to pre-pandemic levels of 2019 in terms of international visitor spending, are Doha with a 21 per cent rise in tourist spend, Orlando, Florida, with a 19 per cent increase and Antalya in Turkey with 15 per cent.
"It was in 2022 that cities began their true recovery, as travel restrictions were lifted and demand for international travel returned," said Julia Simpson, president and chief executive of the WTTC.
"As tourism recovers, overcrowding in some destinations is a risk. It is, therefore, important for cities to have the right policies in place to address it. Such policies ought to be enacted in advance before the problem comes to fruition."
The report, which was released at the WTTC global summit in Riyadh this week, analysed 82 international city destinations and found that their tourism sectors' recovery was well under way after the Covid-19 pandemic that paralysed travel for nearly three years.
According to the report, 10 of the 82 cities analysed are projected to exceed pre-pandemic levels in terms of direct travel and tourism gross domestic product contribution to their economies this year.
Doha is forecast for the largest increase from 2019, in terms of travel and tourism sector's contribution to the city’s GDP, with an expected increase of 21 per cent.
In Europe, Warsaw is expected to record a significant 14 per cent increase, while in the US, Orlando is projected to post a 10 per cent increase over the same period.
The cities forecast to record the largest direct travel and tourism contribution to GDP this year are Paris with $36 billion, Beijing with $33 billion and Orlando with $31 billion, the report showed.
The travel and tourism sector will directly generate up to 8 per cent of all jobs by 2032 in the cities analysed, up from 6.6 per cent in 2019 and a low of 5.1 per cent in 2020, underscoring the importance of city tourism in driving economic growth, the WTTC said.
This year, direct jobs in travel and tourism are expected to return to 2019 levels in 11 cities including Rio de Janeiro with 18 per cent growth, followed by Johannesburg and Chicago with 13 per cent growth each.
The travel and tourism industry will generate 126 million jobs globally over the next decade, becoming a critical driver of economic growth with its contribution to GDP growing faster than other sectors, according to the WTTC.
From this year to next, the strongest annual average growth in direct travel and tourism GDP is expected to be concentrated in the Asia-Pacific with Hong Kong, Bangkok and Jakarta being the top performers, the report suggested.
The Saudi Arabian cities of Riyadh and Jeddah are also expected to register strong growth, according to the report.
"For millions of tourists around the world, major cities remain iconic global destinations. There’s still a strong appetite to experience the history, culture and energy that cities offer travellers," Ms Simpson said.
“This year cities are recovering around the world, and we forecast that cities will continue to grow and thrive over the next decade."
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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Profile of RentSher
Started: October 2015 in India, November 2016 in UAE
Founders: Harsh Dhand; Vaibhav and Purvashi Doshi
Based: Bangalore, India and Dubai, UAE
Sector: Online rental marketplace
Size: 40 employees
Investment: $2 million
