5 Reasons Why Tourism Is Poised to Explode in Dubai and Abu Dhabi

by Greg Oates

During the Dubai Airshow in November last year, Abu Dhabi-based Etihad Airways placed orders for 86 Boeing 777/787s, while Dubai-based Emirates ordered $99 billion worth of equipment—including 150 Boeing 777s and 50 Airbus A380s—the largest single aircraft purchase in civil aviation history.

Then in April this year, Dubai International Airport passed London’s Heathrow as the world’s busiest gateway for international travelers.

And yet, Dubai and Abu Dhabi are just warming up in terms of tourism and hospitality development. The two cities in the United Arab Emirates, located 75 minutes apart by car, anchor a region “poised to take off” according to the new Amadeus study: Shaping the Future of Travel in the Gulf Cooperation Council (GCC).

Member nations of the GCC are: Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE.

The paper examines tourism projections over the next 15 years throughout the entire region, but there’s a disproportionately large focus on the UAE. Dubai and Abu Dhabi are leading the GCC’s growth, not just in terms of infrastructure expansion and passenger traffic, but also more globally-attuned socio-political shifts in the public and private sectors.

“Faced with increasing complexity, companies are at the precipice of change,” says Aroop Zutshi, president/managing partner of market research firm Frost & Sullivan, who produced the report. “A region poised for social change combined with a need to grow globally is increasing pressures on companies based in the Middle East to innovate in new exciting ways.”

For some Western travelers, the UAE is saddled with a variety of stereotypes both real and imagined. We contacted Nicholas Clayton, COO of the government-owned Jumeirah Group, to learn how UAE hotels promote to the North American market.

“I can’t think of anywhere else to go to learn in a more friendly and inviting way about this part of the world, and the people who live here, and the history and cultural heritage, than Dubai,” says Clayton. “Here, I have quality lift into the destination, I have quality logistics on the ground, I have quality hotels and all types of leisure activities, dining opportunities and special events. And meanwhile, I get to understand the Arab culture more. I appreciate that they are people of the world just like everybody else, and that some of the differences that we have between some of the cultures are not that big of differences at all.”

Clayton likens Dubai to Singapore. It’s an international gateway city with English widely spoken everywhere that provides easy access into a complex region, with a high degree of safety, stability and infrastructure by Western standards.

“Dubai is very much an international city; I mean, I remember 20 years ago first hearing about Dubai and I had no idea what that meant,” says Clayton. “But today when you talk about world cities, you talk about Tokyo, Hong Kong, London, Paris—and Dubai is on that list now. It’s actually on the same list. Think about that. In 20 years, Dubai has evolved from a complete unknown into a world city. And one of the reasons for that is because in this part of the world, Dubai is a place of tolerance, a celebration of diversity, and it is very much a high-quality destination to live and work.”

The GCC Future of Travel study is organized around five “Big Effects,” all contributing significantly to the UAE’s future growth as outlined in the development strategy initiatives: Dubai Tourism Vision for 2020 and Abu Dhabi Economic Vision 2030. Here’s a breakdown of each of them in the order they’re presented.

1. The Population Effect

The steady rise in expatriate workers moving to the UAE, the importance of family and religious travel, and a comparatively robust natural population growth are contributing to a rise in inter-regional travel within the GCC. The report states: “Pivotal among these trends are a near 30% increase in population, a huge swath of under-15 population, and a desire for large families.”

The total amount of spend by GCC member visitors within the region is expected to jump almost fourfold in the next 15 years, from $55 billion today to $216 million in 2030.

Furthermore, the UAE has yet to fully tap into the growing independent, middle-income and “coming-of-age” segments, both within the GCC and internationally. For example, for the fast-growing base of young Russian, Chinese and Indian leisure and business travelers, Dubai is among their highest in-demand destinations due to the city’s close proximity, modernity, beaches and extensive leisure activities.

“By 2030, China’s middle class will comprise 70% of its total population, while the comparable figure for India will be 50%,” quotes the report. “The impact on the GCC travel and tourism industry will be huge.”

2. The ‘Beyond Oil’ Effect

In economics, the “Dutch Disease” refers to countries that are over-reliant on the exportation of natural resources, while under-developing their manufacturing and services sectors. The UAE’s diversification into aviation, tourism, trade, financial services and other industries is a direct response to that in the era of Peak Oil—the point where we’ve run out of cheap hydrocarbon resource supply.

Through 2030, the UAE is scheduled to invest over $300 billion in new tourism-related infrastructure. Spurring private development, a 10% municipality fee has been waived for new hotels opening before June 2017.

“All of these diversification efforts are yielding results,” reads the Amadeus research. “According to the IMD World Competitive Centre Index, the UAE was ranked as the 26th most diversified economy in the world in 2012, ahead of many developed countries.”

Future tourism growth markets presently under aggressive expansion include cruise and medical travel. The rapid port construction throughout the GCC is expected to attract 2.1 million cruise tourists by 2013. And in Dubai alone, 22 hospitals are planned or under construction to help deliver a total of 500,000 medical tourists to the UAE by 2020.

One of the most wide-open spaces in the UAE ripe for exploitation is the global meetings and convention industry. In March this year, the eighth annual Gulf Incentives, Business Travel & Meetings (GIBTM) trade show hosted 250 international meeting planners and 300 suppliers for face-to-face appointments, followed by the release of the event’s first ever Middle East Buyers Report.

“The number of meetings in the Middle East has grown quicker than in other regions, it has more than tripled over the last decade,” said GIBTM Exhibition Manager Lois Hall.

Martin Sirk, CEO of the International Congress & Convention Association (ICCA), explains, “The Middle East joined the information revolution more recently than most regions, so it is not surprising to see some of the world’s fastest growth rates here, now that excellent meetings infrastructure has been developed, and governments have created knowledge strategies to underpin their economic development agendas.”

“The city benefits tremendously from large congresses,” adds Clayton. “We just had a group from China in, a group called Nu Skin with 16,000 delegates. This is phenomenally helpful for Dubai, because what they do, of course, they create transient demand. So we see groups, incentives and things like that for their value beyond that one occasion.”

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