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Fri 13 Jul 2018 12:10 AM

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Opinion: Dubai's hospitality sector - a shifting landscape

Visitor numbers continue to rise even as the industry undergoes transformational challenges

Opinion: Dubai's hospitality sector - a shifting landscape
Making a statement Dubai’s flagship hospitality projects are attracting greater tourism numbers to the city

As Dubai continues its drive to attract 20 million tourists annually by 2020, the emirate – and indeed the wider UAE’s – travel and hospitality industry is in a state of flux. Attention is turning to new source markets, a greater range of mid-market accommodation options and, in many ways, a new operating environment.

In this quest, the city is starting from a solid base. In 2017 it attracted 15.79 million visitors, a 6.2 percent rise on the previous year. And all this is before the additional influx of visitors expected for Expo 2020.

With this anticipated increase has come more supply, with the emirate expected to have 132,000 rooms at the end of 2019, up from 107,431 keys in 2017.

Long-term demand

A natural by-product of these ambitious targets is concern about the future. Namely, are these numbers sustainable? While the overall feeling remains optimistic, some, like new Jumeirah CEO José Silva (and this week’s cover star), speculate that the event may lead to a sluggish hospitality market in the short-term. Silva believes that the city will require “two-to-three years” to soak up an oversupply in hotels built to accommodate the influx of Expo guests.

Nobody knows what the future will hold, but Silva’s prediction is certainly a possible scenario and is one that has occurred in other major cities after events. Barcelona struggled in the immediate aftermath of the 1992 Olympic Games, but now attracts 30 million tourists per year. Examples like this mean Dubai’s hospitality professionals can rest easy knowing that any lull should pass.

Dubai officials, for their part, are also not worried. As Dubai Tourism and Commerce Marketing (DTCM) CEO Issam Kazim told Arabian Business last April, the plan to attract 20 million tourists is independent of the Expo factor, and pre-dates the announcement that Dubai would host the event.

This long-term planning, he told us, is what separates Dubai from cities such as post-Olympics Barcelona. “We always looked for a sustainable model. So, whenever we talk about growth numbers, we aren’t linking it to Expo 2020.”

New growth markets

Another strength of Dubai is that it has adopted a diversified approach when it comes to boosting numbers from other source countries.

Such a strategy pays off every year, and will continue to do so. In 2017, for example, the number of Russian tourists rose by an astounding 121 percent, while the number of Chinese students rose 41 percent. The numbers have since continued to grow, with 258,000 Chinese visitors coming to Dubai in the first quarter of 2018, a 12 percent increase over the same time period in 2017.

The plan to attract 20 million tourists is independent of the Expo  and pre-dates the announcement”

Ease of access

This multi-pronged tourism strategy is aided by regular updates to visa policies for those incoming visitors.

“When we see steady growth in demand and numbers, that’s where we begin discussions to see how we can make it easier,” Kazim told us. “The growth is actually before the visa changes happen, but that makes it easier for people to access Dubai.”

This strategy has already proved fruitful – the growth in Chinese visitors followed the introduction of visa-on-arrival in November 2016.

If such trends continue, the future of Dubai’s hospitality sector looks bright. As Silva – who has taken part in a number of other expos in the past – says in this issue, “My experience is that it only helps markets grow, because once you have more supply and offerings, inevitably, you will have more tourism, and it will soon after be fully consumed and growth will continue,” he says.

In other words, Dubai looks set to once again conform to the mantra that has sustained it for several decades: build it and they will most definitely come.

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