Increased investment – from sharia-compliant accommodation to consumer goods – is helping Dubai position itself as a key player in the rapidly expanding global halal travel industry.
Muslim visitors accounted for around 10% of the global travel market last year, with a total of 117m trips made, according to the 2016 Global Muslim Travel Index, produced by MasterCard and the Singapore-based halal ratings firm CrescentRating.
This figure is projected to reach 168m by 2020, rising to 11% of the global total, with revenue generated by the Muslim travel segment to top $200bn.
The UAE – and Dubai in particular – stands to benefit from this trend. The MasterCard and CrescentRating report named the country as one of the top-10 Ramadan destinations for Muslim travellers this year, ranked eighth out of the 49 nations covered in its survey released in June. However, the UAE is expected to rank second by 2022 and first by 2027, according to the report.
At the emirate level, Dubai was recently named the best destination for Muslim travellers in the inaugural halal travel awards by Salam Standard, an online hotel reference for the Islamic market.
According to the panel of Islamic travel experts judging the awards, Dubai won out over international rivals for what were described as its “Muslim-friendly credentials, with halal food, prayer facilities, cultural experiences and accommodation”. The judges also cited the emirate’s family focus and appeal to a broad cross-section of nationalities.
Halal tourism requires careful market research and products designed to meet the specific needs of clientele, according to Muhammad Chbib, founder and CEO of Dubai-based online travel services firm Tajawal.
“Dubai is investing a lot in attracting more visitors,” he told OBG. “People from outside the region would not understand certain local needs. For instance, taking alcohol out of the minibar, having bidets, separate pools for men and women, and having female personnel in some areas.”
While ensuring that halal standards are met across the hospitality sector is vital in order to ensure the best experience for travellers, it is also critical to develop a package of attractions to encourage families to make Dubai their destination of choice, according to Amadeus MENA, a leading technology provider for the travel industry.
“This year there are all the new theme parks opening, and Dubai will eventually achieve its target of 20m visitors by 2020. Dubai is doing the right things at the moment, setting up the right goals,” Antoine Medawar, vice-president of Amadeus MENA, told OBG.
With studies showing that family holidays play a key role in the growth of halal tourism, Dubai’s reputation as a safe destination can also be leveraged.
“The safety and security of the city and late-night shopping … are big draws for Dubai,” Irfan Ahmad, founder and CEO of Dubai-based Islamic travel website Irhal.com, told local press.
The rise of halal tourism is feeding into other sectors of Dubai’s economy beyond the hospitality industry, with construction being one of the main beneficiaries of the segment’s growth.
Ziad El Chaar, managing director of real estate developer Damac Properties, told local press, “The demand arising from halal tourism is gaining traction in Dubai. A significant number of visitors from the GCC, most notably Saudi Arabia, seek luxury accommodation options which are also sharia-compliant.”
Saudi tourists accounted for the largest share of GCC visitors, with 1.5m visiting Dubai last year and 2.5m projected to visit per annum by 2020, according to press reports.
This demand, combined with the current limited hotel supply in the market, represents a significant opportunity, according to El Chaar, whose firm is developing Ghalia, a 38-storey property in Jumeirah Village that will offer sharia-compliant serviced hotel apartments.
The Ghalia development will have 742 studio, one-, two- and three-bedroom apartments, with completion scheduled for the fourth quarter of 2017.
Growth in halal tourism is also expected to drive expansion in the sharia-compliant consumer goods segment both in Dubai and the wider UAE, with food and beverages, pharmaceuticals, cosmetics and general retail all projected to see a rise in demand.
Indeed, the UAE placed either second or third in the categories of halal food, Islamic finance and Islamic fashion among the 73 countries covered in the 2015-16 “State of the Global Islamic Economy” report; only Malaysia had a higher overall ranking.
At present, however, many of the halal products consumed in Dubai and the rest of the UAE are being imported. According to the report, the UAE achieved lower rankings in the halal pharmaceuticals and cosmetics categories, which likely reflects the country’s role as a predominantly service-based economy, rather than a centre of manufacturing.
Nonetheless, Dubai is well placed to cater to this rise in demand, having recently identified both pharmaceuticals and cosmetics, and food and beverages as key pillars in its 2030 Dubai Industrial Strategy, launched in late June. The strategy seeks to make Dubai a global production and distribution centre for the Islamic products market, as well as meet rising domestic demand.
Oxford Business Group is now on Instagram. Follow us here for news and stunning imagery from the more than 30 markets we cover.
Stay updated on how some of the world’s most promising markets are being affected by the Covid-19 pandemic, and what actions governments and private businesses are taking to mitigate challenges and ensure their long-term growth story continues.
Register now and also receive a complimentary 2-month licence to the OBG Research Terminal.
Register Here×What are the primary factors shaping the evolution of corporate governance in the GCC’s financial sector?
The Turkish Prime Minister Bulent Ecevit has spent the last week in the US hoping to garner support for economic reforms at home and trade concessions for Turkish exports to the US.
