Kippreport investigates if oil prices aren’t the only cause for the market slumpAugust 27, 2015 12:00
The off-peak year, Part II
Caught in the midst of infrastructure overdrive and global slowdown, the region’s tourism sector will be forced to find new revenue streams to survive the lean times, Part II.
August 11, 2009 7:58 by Ehtesham Shahid
Road to recovery. The same yardstick cannot apply to the entire region, but Dubai and its exploits in recent years have certainly raised the bar on tourism potential. As one would expect, Dubai has suffered the most in the face of the downturn. Euromonitor considers Dubai’s population decline of 17 percent a major concern. Then there is the real-estate bust, over half of the city’s development projects are on hold or delayed, and there are cases of expatriate migration and rising job losses.
According to an Economic Intelligence Unit report, the rapid population growth witnessed in 2006-08 in the UAE has now gone into reverse as expatriate jobs are cut in the construction, real estate, tourism and financial services sectors. “This will affect private consumption in both the short and medium term,” it says. But Graham Cooke, the founder and managing director of the World Travel Awards, says it is all part of a growth curve and the region is no different.
“Whenever a new destination is discovered, tourist numbers rise drastically and then level off. What Dubai did for the Middle East’s tourism sector was fantastic – it put them on the map and brought everyone’s focus to this region. Now the region’s tourism destinations should think how they can build from that,” he says. The trouble is, three of Dubai’s key tourist markets – the UK, the euro zone and Russia – are in recession, with depressed consumer confidence and rising unemployment.
Cooke admits the number of tourists and business travelers will decline given the global financial situation, but that’s not the end of the road. “As long as these destinations continue to remain competitive, their airlines continue to offer world-class service, and their tourism experience continues to diversify, tourists will keep coming,” he says. “I don’t think it will be as catastrophic as people make it to be. If the projected number of tourists don’t show up in the Gulf countries there will still be a tourism sector.”
Nevertheless, despite those encouraging words, the sector is not investor grade in the near future. The Jones Lang LaSalle “Hotel Investment Outlook 2009″ report bluntly sums up the future with a simple chronology: “2009 will be the year of correction, 2010 will bring market stability ahead of general recovery in 2011.”
First seen in Trends magazine.