Safe haven: Regional strife has resulted in increased tourist activity in the emirate

The political unrest that swept through the Middle East and North Africa since late 2010 has had a deleterious economic effect on many countries in the region. The uprisings – known collectively as the “Arab Spring” – have overturned longstanding governments in Tunisia, Libya, Egypt and Yemen, and caused prolonged periods of instability in a handful of other countries. At the same time, the protests have created pockets of potential throughout the region. The major oil- and gas-producing countries in the Gulf, including Saudi Arabia, Qatar and the UAE, have benefitted substantially from the Arab Spring. For example, unlike many of their neighbours in the region, these nations have remained quite stable in the face of the regional protests. The UAE, in particular, has attracted a substantial amount of new economic activity since early 2011 as investors have worked to move money out of unpredictable countries and into safe, stable, growing markets.

COLLATERAL BENEFITS: Dubai has been one of the primary beneficiaries of the Arab Spring thus far. The emirate boasts one of the most transparent economies in the region, which has helped to attract new investors. Perhaps most importantly, Dubai’s reputation as a key regional investment and tourist destination has stood it in good stead in the eyes of firms and tourists looking for safety and stability in the Middle East.

The government and the tourism industry have made an effort to take advantage of this situation. The UAE has been working to improve public participation in government since 2005, when Sheikh Khalifa bin Zayed Al Nahyan, the president of the country (and ruler of Abu Dhabi), announced plans to empower the Federal National Council, the country’s legislature, in the coming years (see Country Profile).

LASTING EFFECTS: While the Arab Spring has created many new opportunities for Dubai’s tourism industry over the past two years, the long-term impact of the regional unrest remains unclear. With this in mind, the government is working to ensure that the recent boost in the tourism market has a lasting impact. The Department of Tourism and Commerce Marketing (DTCM), the emirate’s tourism agency, has made an effort to leverage on Dubai’s newfound popularity among tourists looking for a safe vacation or business destination in the region. The department has launched promotional campaigns in a number of key foreign markets, for example, with the goal of positioning the emirate as a secure, accessible and affordable alternative to other major cities in the region that have been affected by the Arab Spring. Cairo and Damascus, for example, have seen rapidly declining tourist numbers since early 2011. As long as demonstrations continue to take place throughout the Middle East, Dubai stands to continue to benefit from its status as a safe haven in a turbulent region.

KEY MARKETS: While the emirate’s tourism industry as a whole has benefitted from regional events, a number of key segments have performed particularly well in recent years. Local shopping malls and other retail destinations have seen up to a 10% jump in spending, according to estimates from local players, for example. The booming retail sector, which posted solid returns through the downturn, is considered to be one of Dubai’s major assets in terms of attracting tourists. Similarly, while the emirate has been a major meetings, incentives, conferences and exhibitions (MICE) destination for more than a decade, since early 2011 the sector has been buoyed by the regional unrest.

The Dubai Convention Bureau (DCB), which falls under the oversight of the DTCM, has taken a leading role in expanding the segment in recent years. The Arab Spring has also resulted in increased activity in Dubai’s cruise segment, which is expected to become a major economic contributor in the near future. Finally, the local leisure segment, which accounts for more than 40% of total hotel room nights in the emirate, has benefitted substantially from the regional unrest. In particular, visitors from Saudi Arabia, who have traditionally accounted for the largest group of incoming tourists in Dubai, have increased over the past few years, as other regional vacation destinations have increasingly come to be viewed as potentially risky.

RETAIL: The retail sector, a major driver of tourism in the emirate, has expanded steadily in recent years. During the 2011 Dubai Shopping Festival, an annual month-long affair that attracts millions of shoppers to the emirate, visitors from outside of the UAE accounted for Dh5.9bn ($1.6bn), or nearly 40%, of the total Dh15.1bn ($4.1bn) in revenues brought in by local retailers during the events. Tourists represent a growing source of retail revenues during the rest of the year, as well. In particular, retail has seen a steadily increasing number of shoppers from Russia, China and a handful of wealthy GCC countries, primarily Saudi Arabia and Qatar.

The recent influx of tourists into the emirate due to the Arab Spring has resulted in increased interest from retailers as well. According CB Richard Ellis, a multinational real estate services firm, as of April 2012 Dubai was the second-most targeted city in the world for international retailers, just behind London. Regional mall operators expect to see continued growth in the emirates as a whole. “About 70% of our sales are in the UAE,” Steve Hammett, the president of Majid Al-Futtaim (MAF) Retail, the retail division of the MAF Group, the largest mall developer in Dubai and one of the largest in the Middle East, told local press in early October 2012. The MAF Group expects this figure to fall to around 60% in five years, even as the company’s overall business is set to double over the same period.

MICE: The MICE market has also grown substantially in recent years, largely as a result of the volatile situation elsewhere in the region. The DCB has worked closely with private and public sector organisations alike to attract some of the world’s largest and most prestigious events to the emirate in recent years. In 2011 Dubai hosted 34 events in total, and this figure is expected to rise in 2012. Major organisations that have held events in Dubai recently or plan to in the coming years include the International Diabetes Federation, the World Heart Federation, the World Energy Forum, the International Bar Association, the World Conference on International Telecommunications, the Global Standards Symposium and the International Symposium on Electronic Art, among others (see Overview).

OTHERS: The Arab Spring has also directly impacted Dubai’s burgeoning cruise segment. As of mid-2012 the emirate served as a regional home port for five international cruise lines, including Royal Caribbean and Costa Cruises, among others. Cruises departing from the emirate’s Port Rashid generally call on a handful of cities in the Gulf and the Red Sea, including Muscat, Bahrain and Abu Dhabi, among others, before heading back to Dubai. In addition to serving as a home port, Dubai is a regular port of call on trips organised by more than 20 international cruise lines. Since early 2011, however, a number of cruise lines have cancelled stops in countries that have been affected by regional unrest, including Bahrain, Jordan and Egypt, among others.

FROM ALL OVER: As of early February 2011 occupancy levels at Dubai’s hotels were 20% higher than the same period the previous year, due in large part to tourists from around the world avoiding nations that had experienced protests during the preceding 12 months. “We have received so many requests from the European markets to operate charter flights,” Samir Hamadeh, the general manager of Alpha Tours Dubai, a local firm, told media in early 2011. “European tour operators are stopping sales in so many areas in Egypt, so they need to transfer all their tourists who are already booked into other destinations.”

According to the DTCM, in recent years visitors from Russia, CIS member states and the Baltics have been the second-largest group (after visitors from the UK) of European tourists in Dubai. According to news reports, as of late 2012 many local operators were expecting to see a 20% jump in the number of Russian tourists in Dubai for the year as compared to the previous year. Similarly, Chinese tourists represent one of the fastestgrowing groups of incoming tourists in Dubai. In 2011 the emirate welcomed 214,000 visitors from China, up from just 25,000 in 2001, according to data from Jones Lang LaSalle, a multinational real estate research firm. This figure is expected to jump substantially in 2012. Indeed, as of May 2012, Dubai had already welcomed around 193,000 Chinese tourists in total.

Tourists from other GCC countries have grown steadily in recent years, largely due to Dubai’s reputation as a regional retail centre and the fact that many other Arab destinations are currently considered to be offlimits. In 2011 more than 873,000 visitors from Saudi Arabia entered the emirate, accounting for nearly 10% of Dubai’s total incoming tourists for the year. This figure is widely expected to rise in the coming years. Saudis accounted for around 55% of all GCC visitors to Dubai for the year, according to the Saudi Tourism Information and Research Centre. The number of Qataris travelling to traditionally popular destinations such as Egypt and Jordan dropped off substantially after the Arab Spring kicked off in early 2011, for example – according to local news reports, Dubai was the most popular destination in the region among Qatari tourists in 2011.