The UAE’s tourism sector is predicted to see a massive surge over the next five years, with the inflow of international tourists to the country expected to surpass 40 million by 2030, driving a $100 billion contribution to its economy, latest market research said.
Aggressive marketing campaigns and promotional efforts by the UAE’s tourism authorities and private sector players are cited as the key drivers of the continued uptick in inward tourism.
The country’s visa reforms and relaxed entry requirements also make it easier for tourists from various countries to visit, encouraging more spontaneous travel and tourism, according to research by RedSeer, a global consultancy.
Tourist expenditure is projected to shoot up to a whopping $100 billion by 2030 from $48 billion in 2023, while the contribution of tourism to the UAE retail market is projected to reach $18 billion during the period, from $10 billion in 2023.
The rising trend of international and regional travellers loosening their wallets to go shopping-spree is also borne out by the estimated three-fold jump in tourist retail in 2023 over resident retail, RedSeer said.
The RedSeer research said the ambitious UAE Tourism Strategy 2031 is a major pivot for boosting the tourism sector, positioning the country as a leading global tourist destination.
The strategy aims to raise the tourism sector’s contribution to the GDP to about $123 billion by 2031, and to strengthen the position of the UAE as one of the best destinations in the world for tourism.
“Tourism already contributes 12-15 per cent to the UAE’s GDP, and this figure is poised to grow under the UAE’s tourism strategy initiative,” Akshay Jayaprakasan, Associate Partner, RedSeer Strategy Consultants, told Arabian Business.
UAE: Top tourist spend in hospitality, retail
The study said hospitality has emerged as the top spending area for overseas travellers to the Emirates, accounting for 45 per cent of tourist wallet, followed by shopping constituting about 18-20 per cent of the spend in 2023.
Tourists visiting the UAE are drawn to its luxurious accommodations and world-class dining options, which exemplify the country’s reputation for opulence and culinary excellence, it said.
The study showed that within retail, fashion is the biggest segment accounting for more than 70 per cent of tourist retail spend in 2023, underscoring the UAE’s reputation as a fashion-forward destination with a plethora of luxury shopping malls, catering to diverse tastes and preferences, it said.
Electronics is the fastest growing sector in retail purchases by tourists, poised to expand at 9 per cent CAGR (compound annual growth rate) between 2023-2028, driven by the country’s reputation for offering a wide range of cutting-edge technology products, RedSeer said.
“Tourism contributes more than 10 per cent of the retail market in UAE and hence it is very important to look at the tourism impact whenever we look at the retail market in UAE,” Jayaprakasan said.
“However, as the UAE continues to invest in creating unique experiences encouraging longer stays and deeper engagement from visitors, we anticipate a slight shift in the spending mix, with food and entertainment gaining a larger share,” he said.
The RedSeer research also said UAE’s efforts to host numerous international events, conferences, and exhibitions throughout the year act as a major catalyst in attracting business travellers and tourists alike.
The authorities’ move to hold various star events at the famed Expo City Dubai also helped significantly boost tourist numbers, it said.
Tourism boosts F&B, retail growth amid unique shopping experience
The research revealed that the food and beverage sector is fast emerging as a major beneficiary of the continued surge in international tourist arrivals, with the sector offering a diverse range of dining options across various cuisines and price points, catering to the needs of all tourists visiting the region.
“Additionally, entertainment venues feature exquisite food outlets, leading to an $18 billion-plus tourism retail opportunity by 2030,” the report said.
Last year, tourists’ retail spending was estimated to have grown three times, compared to residents’ retail spend, driven by electronics and fashion categories.
“Tourists are increasingly seeking unique shopping experiences that encompass high-end shopping experiences when visiting the UAE.
“Besides, UAE’s tax-free shopping experience remains an attractive reason for international tourists’ retail experiences,” RedSeer said.
It, however, pointed out that with the increase in rental costs in the UAE, consumer wallet share for retail decreased among the residents, resulting in a slower growth of the retail market than expected.
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