Holidaymakers flock to Middle East

The world's bleak economic prognosis has failed to deter tourists from visiting the region.

Tourists explore the Dubai Museum.

UNITED NATIONS // The world's bleak economic prognosis has failed to deter tourists from spending on holidays, and so far this year the UAE has lured more holidaymakers than it did last spring. The UN's World Tourism Organisation (UNWTO) released statistics this week that show 5.7 per cent more tourists came to the UAE in the first four months of this year than in the same period last year, while visitors to the wider Middle East grew by 12.5 per cent.

Despite the combined impact of a credit crunch, concerns about global warming and soaring prices of food and oil, the UNWTO's bi-annual World Tourism Barometer recorded a five per cent increase in international tourism from January to April. John Kester, the head of UNWTO's market trends department, said the UAE was reaping the benefits of converting the sun-rich country into an attractive holiday destination with huge hotel, entertainment and airport projects.

"In Dubai and the other emirates, you can see really vigorous development. They have been investing quite substantially in tourism, and tourism has really moved up on the agenda," he said. "We see the same thing in Oman, Qatar and Saudi Arabia, which have been putting money in tourism development. Also, airlines like Emirates and Qatar Airways have been very active in capturing demand and increasing their routes."

The report cites US$30 billion (Dh110bn) of investment in Gulf airports, three-quarters of which are being undertaken in the UAE, while 120,000 new hotel rooms are slated to become available across the region. The Abu Dhabi Tourism Authority (ADTA) has raised its hotel guest projections from targets set in 2004, with 2.7 million visitors now expected annually by the end of 2012 - 12.5 per cent more than originally envisaged.

The emirate also plans to have 25,000 hotel rooms by the end of 2012 - 4,000 more than the original forecast. During the first quarter of 2008, Abu Dhabi hotels had occupancy rates of 87 per cent, while those in Dubai were 88.3 per cent. Mr Kester said the country was benefiting from increased regional wealth, with oil-rich khaleejis (residents of the Gulf states) spending windfall gains from high crude prices and growing numbers of middle-income earners across the Arab world.

"There is quite a bit of oil money around and part of that is going into tourism," said Mr Kester. "We are also seeing an emerging middle class in a number of Middle East countries - people who are taking holidays when they never used to. "Also, holiday options are now becoming available in the region. In the past, people had to look outside the region for their holidays because there was not much on offer. This has changed significantly."

While the Emirates fared well, substantially more growth was recorded in up-and-coming Gulf destinations such as Bahrain, which had a 10.5 per cent increase in visitors, and Saudi Arabia, which welcomed 32.6 per cent more tourists. Egypt also saw 25.1 per cent more visitors in the first four months of the year, thanks to what the report describes as "consumer confidence in the destination" and "price competitiveness and continued aggressive marketing in major and emerging markets".

But UNWTO researchers warn that the UAE cannot rest upon its laurels, with the unprecedented expansion of tourism in Abu Dhabi and Dubai outstripping talent and presenting a "major headache in terms of qualified human resource availability". The glut of hotel rooms coming online across the Emirates is also expected to exceed demand, resulting in lower occupancy figures and a "decline in average rates expected", according to the researchers.

While the UAE and Gulf destinations benefit from high oil prices, "the region will not remain immune to their impact because of the cost of travel from key source countries" such as those in western Europe, the report warns. Francesco Frangialli, UNWTO's secretary general, said early predictions indicated 2008 would yield continued growth, but "consumer confidence" and "pressure on household spending and travel budgets" would likely cause a market slowdown.

"The extent of any tourism demand adjustment, and its consequences for the sector, will depend on how the economy evolves and consumers react, both of which are directly interrelated to oil and food prices," said Mr Frangialli. "UNWTO is monitoring this evolving situation closely. Given current circumstances we are cautious, although we remain positive for the overall industry perspectives in 2008."