Regardless of how many times I visit Dubai, every trip feels like it’s my first time there. With its ever-changing landscape and continuing development, every journey to the emirate highlights something newer, bigger, better. For someone who spends a lot of time thinking about hotels (primarily hotel data), it is a bit like being a kid in the candy store with the lavish projects and grand hotels.
The emirate, which projects an aura of unparalleled success, was a great setting for this month’s Arabian Hotel Investment Conference, which shed light on the region’s seemingly bright future.
Topics during the conference ran the gamut from an uncertain global economy to the ongoing challenges in the region to hot investment markets. The mood from attendees was certainly more optimistic than last year but rather than the feeling of invincibility of the pre-global financial downturn, the confidence was measured and expectations more realistic.
Our data shows marked performance growth for the United Arab Emirates for the first quarter with revenue-per-available-room growth of 11.2%. Dubai was up 11.6%, and Abu Dhabi reported increases of 9% from first quarter 2012. According to the United Nations World Tourism Organization, by tourism receipts, the United Arab Emirates ranks 31st in the world’s most popular tourism destination and is No. 1 in the Arab world. In addition to the attractive destination for visitors, Dubai and Abu Dhabi have been seen as safe havens in the region.
Dubai’s Vision 2020 was announced during the conference, with goals that included a focus on family tourism and meetings, incentives, conferences and events business, which will serve to treble tourism’s economic contribution to Dubai and welcome 20 million visitors per year by 2020. Dubai is continuing to invest in tourism infrastructure. Airlift continues to grow through existing and expanding routes, making Dubai the world’s second busiest airport. The airport, which I and many others suspect will surpass Heathrow in the next 12-18 months, is a curious place. With bright lights, shopping and round-the-clock activity, it often feels like noon in the middle of the night.
Meanwhile, Abu Dhabi is developing demand drivers to promote its tourism and travel industry. One of the reasons the emirate has struggled of late has been a rapid and extreme amount of new supply, and its complete dependence on corporate and government business. But with the development of Saadiyat Island, which features the Zayed National Museum, the Guggenheim and Louvre, the country will soon provide a culture and leisure tourist offering.
Neighboring emirate Ras Al Khaimah established its Tourism Investment and Development Authority in May 2011, which helped the country make significant infrastructure investment. The goal is to have 10,000 hotel rooms by 2016. Most recently, emirate Sharjah is following the example set by Dubai and Abu Dhabi, announcing its first integrated tourism project, Bu Nuair Island.
Egypt, too, wracked with its own instability, has seen performance increase albeit it from a low base. The Red Sea resorts of Sharm el Sheikh and Hurgada are seeing marked improvement. With tour operators returning and with the launch of the country’s public-relations campaign, I hope Cairo reports more rapid recovery in the coming months. Hisham Zaazou, the Minister of Tourism, was succinct but direct in his remarks that Egypt is “open, safe and wants tourists.”
Yes, optimism seems to reign freely in the Middle East, but it’s a cautious optimism—the buzzword that is pervasive in our industry. Even though there is a strong supply pipeline, investors are proceeding with a bit more knowledge, wisdom and perhaps mild skepticism than they had before, looking at the impact of the new supply on return, operating profit and hotel performance.
We barely scratched the surface of Africa during the conference. The enigmatic continent is so large and full of natural resources that it has immense potential, but industry experts are uncertain how to embrace it and tackle the market. Hotspots in the region include Ghana, Nigeria, Kenya, Ethiopia, Mozambique and Botswana. Of course, infrastructure issues and an inaccessible airlift make traveling to Africa complicated. A lack of transparency when it comes to financing doesn’t help either.
There are a lot of positives going on in the Middle East and Africa region, with good policies and commitments in place. But these positives depend on a strong tourism message that tells travelers to come explore these countries. Governments have to invest in tourism, invest in human capital and make travel and tourism a focal point in these regions where opportunity abounds.
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