_The fundamentals affecting UAE Hospitality & Tourism markets
The sector’s direct contribution to GDP has increased by 138% in the 10 years to 2017 with employment in the sector growing by 119% over the same period. By 2026, forecasts indicate that the direct contribution will increase by an additional 72% and as a result, related employment will grow by 16% to over 659,000.
The UAE (in particular Abu Dhabi and Dubai), has established itself as one of the premier luxury destinations in the world, carving itself a reputation for attracting wealthy tourists. However, over the past few years, a culmination of factors have changed the nature of demand, resulting in a demand base from a broader range of countries and income profiles.
"The fall in the cost of air travel combined with a growing middle class in key source markets has resulted in growing visitors from emerging markets such as China and India."
Abu Dhabi International Airport has seen a 60% increase in passenger numbers in the period January to November 2017 (21.47 million passengers), compared to the same period in 2012 (13.38 million passengers). Dubai International Airport has seen passenger numbers increase from 57.68 million in 2012 to 88.24 million in 2017, a 53% increase.
In an effort to maintain demand growth, we have seen a broader range of demand generators either under construction or under planning which are targeted at various income levels, tastes and cultures.
A similar trend is also occurring with the type of hotels on offer, albeit at a much slower pace. Historically the UAE had a ‘top heavy’ supply with a disproportioned number of four and five-star hotels accounting for 66% and 57% of total available rooms in Abu Dhabi and Dubai respectively. This has made the sector fiercely competitive that has had implications for profitability.