UAE hotel and tourism sector to reach $7.5 billion by 2016

The predicted growth in the hospitality market in the UAE is three times as high as the expected growth in the overall economy in the next four years.

The growth in the UAE hospitality market will outpace the overall GCC market, which is expected to increase at 8.1 per cent per year until 2016. Above, guests enjoy dinner at Mai Cafe of Aloft hotel in Abu Dhabi. Sammy Dallal / The NationalShow less

The hotel and hospitality market in the UAE is forecast to grow at more than 10 per cent a year for the next four years, dramatically outpacing growth in the overall economy.

Revenues from the hotel and hospitality market will reach US$4.9 billion (Dh17.99bn) this year, up from $4.5bn last year, and will eventually grow to $7.5bn by 2016 as tourists continue to flood into the country, according to Alpen Capital’s latest GCC industry report.

The growth in the UAE hospitality market will also outpace the overall GCC market, which is expected to increase at 8.1 per cent per year until 2016.

“The GCC hospitality sector is poised for a healthy growth owing to factors such as favourable economic conditions combined with infrastructure development, increased bids to host high-profile global events and government support to the private sector,” said Sameena Ahmad, managing director at Alpen Capital.

“All these factors have contributed to the steady increase in tourist arrivals which in turn has facilitated the growth of the hospitality industry in the region.”

The predicted growth in the hospitality market in the UAE is three times as high as the expected growth in the overall economy, according to the IMF, which predicts the UAE to expand between 2.8 per cent and 3.6 per cent each year until 2016.

Alpen believes tourist arrivals in the UAE will grow at 5.3 per cent each year, keeping pace with hotel supply, which will increase from 96,992 hotel rooms in Dubai and Abu Dhabi to 125,383 in 2016.

It expects the average price of a room to rise from $183 last year to $220 by 2016. “[The] UAE Government’s investment in infrastructure is likely to emerge as a huge positive,” said Alpen’s report. “These factors are likely to enhance tourism activities in the country, which in turn would boost hotel demand.”

Tourism is one of the key pillars of Abu Dhabi’s Economic Vision 2030 and has been one of the crucial drivers of Dubai’s economy this year. All factors point to a flourishing hospitality market after hotels in Dubai welcomed 10 per cent more guests in the first six months of the year compared with the same period last year, according to the Department of Tourism Commerce and Marke­ting in Dubai.

Revenues at hotels jumped 22 per cent to Dh9.7 billion ($2.64bn) in the first half as guests stayed longer in Dubai and were encouraged to spend more.

Meanwhile, Abu Dhabi too has received a record number of guests this year, and although the emirate is now deemed to be oversaturated with hotels, analysts predict this situation will not last for much longer than next year.