OBG talks to Gerald Lawless, President and Group CEO, Jumeirah Group

Interview: Gerald Lawless

In light of this period of global economic uncertainty, what should be the focus in order for stakeholders to ensure sustainable growth in Dubai?

GERALD LAWLESS: The travel and tourism segments provide jobs for roughly 9% of the world’s labour force, while representing almost 10% of the world’s GDP. The tourism sector in Dubai contributes to 15% to the UAE’s GDP. This is almost equivalent to the contribution of the industrial sector, and it supersedes the contributions of the financial and property sectors. For Dubai to further benefit from the economics of travel and tourism, it must ensure sustainable growth. In my opinion, sustainability is environmental, social and economical. The industry must attend to all three factors, particularly in the luxury segment, where there are frequent travelers who require something beyond just beaches and sand. We must continue evolving in such a way that visitors have more meaningful experiences, whether from a cultural learning, environmental awareness, or health and fitness perspective. These additions will compliment the high-end services Dubai already has to offer. This new formula will not only ensure sustainability but also create a more meaningful experience for visitors.

From which markets is Dubai’s tourism industry experiencing the greatest growth? What steps are being taken to capitalise upon these markets?

LAWLESS: In 2011 the bulk of new visitors to Dubai came from China, India, and Russia and the Commonwealth of Independent States. Those three markets were responsible for roughly 1.8m guests. Needless to say, the emphasis will be on growing these markets, as we anticipate a continuing increase in these figures. In order to capitalise on this, the tourism sector must continue to develop synergies with the transportation industry. Emirates Airlines now serves more than 120 global destinations and plans to expand even further. This has caused a shift in the movement of business, with carriers on every continent using Dubai as an aviation hub. This has resulted in an influx of visitors.

However, Dubai’s continued success is not solely dependent on its worldwide connectivity. The industry must continue to diversify and evolve its product offering in order to cater to new demands, which is something Dubai has historically done very successfully.

To what extent is there an oversupply of hotel rooms? What effect do you anticipate this will have on the market in the medium term?

LAWLESS: The amount of hotels operating in Dubai increased by 5% between 2010 and 2011. In 2012 the number of hotel rooms in the market increased again by 8.3%, reaching a staggering 74,843 hotel and apartment rooms. If one were to delve further into the numbers, one would find Dubai has 64 five-star hotels. This is more than all the five star hotels in the GCC countries combined. To a certain extent one may consider this to be an oversupply. However, this only increases competition, which is great for the consumer and for Brand Dubai. Most importantly, it heightens the market’s focus in terms of how to continually improve to remain at the top of consumers’ minds.

The beauty of being a hotelier in a tourism haven like Dubai is that public entities, such as the Dubai Department of Tourism and Commerce Marketing, the Convention Bureau and the Dubai Events and Promotions Establishment, collaborate with private companies to promote Dubai as the ultimate destination, which is beneficial for all stakeholders. Essentially, we are working diligently to increase the size of the tourism sector. To put things in perspective, Dubai Airport saw 50m passengers worth of foot-traffic in 2012, while the emirate averaged only 10m visitors. That means there are 40m passengers the market can capture. It is a huge opportunity that the industry needs to leverage. Dubai cannot be complacent and hotel construction should continue. An oversupply exists only if the market is left with nothing to absorb, which is not the case in Dubai. Investors and the market will decide when to slow down, and that has been the beauty of this market.