Innovation and diversification powering UAE’s future growth

Abu Dhabi and Dubai in particular are creating new markets by investing in budget accommodation to cater for middle-class travellers from Asia and Africa and short-stay visitors, as well as environmentally-sustainable properties.

Tourism in the UAE is a significant contributor to the country’s wealth, and has the potential to grow further, according to economic experts.

“Tourism in the UAE, including indirect effects such as investment made in the sector and spending from employees in the sector, accounted for close to 9. per cent of GDP in 2015, and contributed to the same share of employment,” Olivier Najar, a Mena country risk analyst at Business Monitor International (BMI), tells The National

“In the region as a whole, the sector accounted for on average 8 per cent of GDP, with significant variations, from less than 5 per cent in Kuwait to more than 20 per cent in Lebanon, according to the World Tourism and Travel Council.

“As part of their economic diversification plans, the majority of Arabian Gulf countries are seeking to drive investment in the tourism sector and attract more visitors, which could increase the tourism contribution for the economy of these countries,” Mr Najar says.

There is a wealth of factors that allow the tourism sector to feed into the wider economy, adds Mr Najar. “Across the region, tourism has traditionally be a catalyst for the development of the retail sector. The UAE’s existing infrastructure assets already act as a major promotional tool for the tourism industry. “Having Dubai International Airport – home to Emirates – as well as the growing capacity at Al Maktoum International, means that Dubai has a ready supply of arrivals.

“After that, Dubai’s entertainment and hotel stock is second to none in the region, which mean that even those arrivals who are passing through are tempted to stay a few days,” says Mr Najar.

According to BMI, the other elements driving growth in the sector include new financial incentives to build previously under-represented mid-range hotels, the country’s strong Mice (Meetings, incentives, conferences, and events) provision, and its reputation as a safe and year-round short-break destination for regional and European tourists.

It also has high standards of accommodation, expansive coastline and attractive cultural heritage.

Diversification is key to the tourism industry. Abu Dhabi and Dubai in particular are creating new markets by investing in budget accommodation to cater for middle-class travellers from Asia and Africa and short-stay visitors, as well as environmentally-sustainable properties. Dubai recently launched the Dubai Sustainable Tourism Initiative (DSTI) with a view to positioning the emirate as a world-class sustainable tourism destination.

Cruise tourism is also expected to grow in Dubai, Abu Dhabi and Sharjah, and new airport and rail infrastructure improvements and the growth of low-cost airlines is expected to boost domestic tourism.

Hotel chains are investing in country and looking to other emirates will offer new markets for hotel operators. Healthcare tourism is also a growth area.

But there are also challenges to overcome says Mr Najar. “In recent years, tourism across the region has suffered from the weak regional security environment, and from the economic slowdown across the Arabian Gulf since the slump in oil prices in late 2014, given that Gulf visitors account for a significant share of tourism spending.”

Meanwhile, the UAE Government continues to view tourism as essential to the country’s economic growth. On November 23, the Ministry of Economy is hosting the first Tourism Innovation and Transformation Forum in Dubai, a one-day event designed to present the potential benefits of innovation in the tourism sector to regional stakeholders.

The Ministry of Economy has created the forum in response to the changes in regional and international tourism patterns and the impact that has on local tourism industry, and plans to turn it into an annual event.

The aim of the workshops and talks is to give government and tourism organisations the tools they need to adapt to the challenges and harness the potential of the massive changes taking place.

BMI forecasts strong performance for the UAE tourism industry, anticipating an increase in the value of international tourism receipts to US$D81.33 billion in 2017, reaching $239.08bn by 2020.

“The tourism industry in the UAE continues to expand, with visitors drawn by the growing range of attractions, well developed transport and accommodation infrastructure and effective marketing campaigns,” it concludes.

“We forecast strong growth in international arrivals throughout the course of the forecast period to 2020. This will boost tourism-related expenditure and ensure tourism continues its significant contribution to the country’s economic outlook.”

business@thenational.ae

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Published: November 20, 2016 04:00 AM

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