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UAE hospitality industry to take flight in second half

Dubai - Sector remains positive on growth boosted by new policies and spending

The UAE's hospitality industry is upbeat on the second half of 2018 and ready to welcome 2019 on a positive note. The sector has received massive support from the government in terms of new policies, opening of new tourist destinations, exemption from value-added tax (VAT) for tourists, preparations for Expo 2020 Dubai - these are some of the prime growth drivers that will steer forward the growth trend.
The UAE hospitality market is expected to reach $7.6 billion by 2022 at a five-year CAGR of 8.5 per cent (2017-2022) and international tourist visits are expected to grow at a five-year CAGR of 4.3 per cent to 25.5 million whereas the hotel supply is expected to grow at a five-year CAGR of 6 per cent to 183,718 hotel rooms, shows Alpen Capital's latest report on GCC Hospitality Industry 2018.

"The UAE, led by Dubai with a volume of new developments in the Middle East, has over 200 projects underway showing GDP growth for hotels and restaurants of 8 per cent year-on-year. Dubai is currently the home to 104 five-star hotels, and we can expect the Emirates' hospitality sector to experience a strong, sustain growth over the coming years with occupancies to reach 35.5 million annually by 2019, representing a 10.2 per cent compound annual growth rate over the next 24 months," points out Arshad Kazi, money master at Xpandretail.
"We are in an era of a shared economy. The change will require a new strategic approach, one which can enable hotels to understand market trends and build the internal capabilities required to succeed in a new landscape. The more the products and services are tailored to offer local experiences and value for money, the better conversion can be expected. There is a strong need to build on experiential travel and hospitality today."
The average daily rate is expected to grow at a five-year compound annual growth rate (CAGR) of 1.3 per cent to $149 until 2022, whereas revenue per available room is expected to grow at a five-year CAGR of 2.1 per cent to $116 by 2022.
Dubai is expected to witness 20 million international tourist arrivals by 2020 and its hotel supply is expected to reach 132,000 by 2019, which also includes the mid-market hotel segment which targets budget travellers.
Raj Sahni, owner and founder of RSG group of companies, said: "As Dubai expands its tourism industry, we see a greater need to enhance our services. Digital disruption has become the single-greatest change in the last decade. With self check-in, app-based stay management and other services, we are able to align ourselves with the evolving world. There is a rise in the use of technology across operations in the industry. We also see the prevalence of a service quality on par with global standards. Already known for its innovative building, style and facilities, the industry has distinguished itself on the world stage. With the current trajectory, it will scale greater heights in the future."
Wego is upbeat on the MEA's online travel marketplace in the second half and is confident that companies will cash in on the expected international tourist spike.
"This upbeat sentiment can be attributed to the dedication and proactive efforts by the Dubai's Department of Tourism and Commerce Marketing, Sharjah Tourism Board, Department of Culture and Tourism - Abu Dhabi and Ras Al Khaimah Tourism Development Authority to attract more travellers to the nation. Some of their tourism-friendly endeavours are The Louvre Abu Dhabi, Warner Bros theme park, Dubai Frame, Jebel Jais Flight, the heritage area in Sharjah and Dubai Parks and Resorts, among others. Additionally, the recent UAE-China strategic partnership and the UAE's new transit visa rules are expected to draw in more visitors," said Mamoun Hmedan, managing director for the Mena and India at Wego,
GCC hospitality is expected to witness increased market penetration by the mid-market hotel segment through 2022. In addition, the industry is expected to also see increased adoption of Airbnb-type renting models. Regional players such as Emaar Hospitality, Rotana, CityMax Hotels and Habtoor Hotels are building room inventories and increasing their construction pipelines at a substantial rate.
"The GCC hospitality industry, which has been under pressure in recent years is expected to gain positive momentum on account of the recovery in oil prices, upcoming mega events, increased tourist inflow, positive regulatory initiatives and increased government spending/investments towards the hospitality and tourism sector. GCC countries have well-defined strategies to develop themselves as preferred travel destinations. They are making significant investments into the development of tourism and hospitality infrastructure, including airport expansions to increase the handling capacity of anticipated visitor inflow," said Sameena Ahmad, managing director at Alpen Capital.
The GCC hospitality market is expected to grow at a 7.2 per cent CAGR from an estimated $22.9 billion in 2017 to $32.5 billion in 2022. Upcoming mega events and government initiatives to boost tourism are the primary drivers behind this growth. Growth in hospitality sector revenue of individual GCC countries is expected to range from 6 per cent to 12 per cent. The UAE is expected to witness high revenue growth on account of significant investment activities in the tourism and hospitality sector for the upcoming Expo 2020 Dubai. Bahrain and Oman are also expected to grow at a rate higher than the GCC average.
Love Mansukhani, managing director at Ribbon Consulting, said: "F&B businesses are starting to offer better value, from a consumer perspective, and also focusing on more asset-light ventures, from an investor perspective. On a macro level, more favourable terms for new business owners, such as reduced visa deposits, will further strengthen the business environment. Furthermore, with the Expo 2020 inching closer, we expect an uptick in the hospitality industry, especially from September onwards, which is typically the start of the high season for the segment."
Deepa Rajesh, director for sales and business development at Cozmo Travel, said: "Significant tourism development such as IMG Worlds of Adventure, Dubai Parks and Resorts and cultural attractions like The Louvre in Abu Dhabi, are expected to steadily attract leisure travellers for the decade beyond 2020. The second quarter of 2018 witnessed marginal year-on-year growth as compared to 2017 in the hospitality sector. The number of tourists arriving from China, Russia, Southeast Asia, UK, Latin America and Sub-Saharan Africa has increased since last year. Even the holy month of Ramadan was a busy period this time compared to the past."
- sandhya@khaleejtimes.com