The Rise of the GCC's Hospitality Sector

by Zaara 07, Mar 2022

The Rise of the GCC's Hospitality Sector

The government established a hospitality industry network in the UAE a few decades ago by building numerous new and sophisticated hospitality facilities. Now, the country can boast of one of the world's most adequate hospitality sectors.

More and more foreign and local hotel chains, resorts, etc., are established every year that offer a higher quality of service. In selecting a place for international and regional events such as conferences, seminars, festivals, etc., this hospitality sector plays an important role. Abu Dhabi's hospitality sector is considered one of the fastest-growing industries in the UAE and accounts for nearly 4.8 per cent of its GDP.

A nation needs to continuously diversify its economy and seek new ways of raising revenue for its economy. In exchange, this would increase the country's Gross Domestic Product (GDP). Holding this in mind, the United Arab Emirates government has also taken measures to relieve the country's hospitality industry’s condition.

The move would significantly reduce the country's reliance on the oil and gas industry and provide the country with an additional revenue source.

The United Arab Emirates economy primarily focused on the oil and hydrocarbon industry. There has been a remarkable growth in the hospitality industry in the United Arab Emirates due to the government’s various efforts. The rise in travel and tourism has complemented the expansion of the hospitality industry.

The rising number of companies being set up in the area is another reason for increased footfall. With the availability of strategic locations, convenient transport and logistics facilities and dedicated free zones, starting up a business has become relatively easy.

The Global Hospitality Scenario

The hospitality industry has seen a considerable increase all over the world. Travel and tourism and the hotel and lodging sectors are the operations of the hospitality industry. The globe has become a smaller place with the advancement of technology and the internet’s growing influence.

The ease of travelling from place to place, the simplified booking of travel tickets and the rising influence of globalisation have contributed to a rise in visitors visiting new locations. There has also been a steady decline in travel costs and a gradual rise in air transport, resulting in more people travelling abroad, either for the company or for fun.

The hospitality sector and the travel and tourism sector are considered the critical industries for job creation and the country's economic growth worldwide. Many nations, such as Brazil, India, South America, the United Arab Emirates, and many others, have eased setting up a company that has opened a gateway for both the travel and tourism industry and the hotel industry.

Hospitality Industry in GCC

The GCC hospitality sector has seen a rise in numbers with the recent decline in oil prices and the numerous geopolitical problems. Rising tourist attractions, countless government programmes, and increased government spending have helped draw millions of foreign visitors worldwide.

In the GCC countries, the World Expo 2020 in Dubai and the FIFA World Cup 2022 in Qatar have spurred development in the hotel market. The tourist destinations in the GCC and the places to stay have also developed. The GCC rooms have seen an increase in hotel rooms to satisfy the tourist demand. There are several more projects worth more than USD 200bn in the pipeline to fulfil the planned requirement.

The Meetings, Activities, and Reward Travel Market (MICE Market) is expected to expand further in GCC countries. It means that, in addition to spending on shopping and entertainment, spending on business-related activities will also increase, thus improving the GCC country's economy.

A race for expansion between the luxury and the mid-market hotel segment has sparked an increase in potential demand for better and an increased number of hotels. The GCC countries' governments’ involvement in the development of airports, hotels, and related infrastructures would increase passenger handling capability. In creating a seamless experience for visitors, other initiatives such as Visa on Arrival and No Cost Visa would play a vital role. In the hospitality and tourism industry, the improvements and developments will benefit the end customer and allow him to make better and more informed travel decisions and have a higher quality of experience.

Reasons for the Growth of the Hospitality Sector in the Middle East

In terms of growth in the hospitality sector, the Middle East, specifically Dubai and Abu Dhabi, are regarded as the GCC's leading cities. They are increasing in tourism and infrastructure and representations of public and private sector jobs and industry. In the hospitality sector, numerous opportunities exist that allow you to benefit from starting a business in the UAE, such as:

1. Increase in Tourism

There are many natural islands, beautiful beaches, different landscapes etc. that attract a lot of visitors. The rise in the number of foreign hotel and resort chains has also contributed to the tourism industry’s growth. Abu Dhabi has become an important centre for medical tourism due to developments in technology.

2. Multi-Cultural Climate

In Abu Dhabi, people from all walks of life live together in peace. There are also visitors from around the world who are present, making it a very accessible and multicultural city.

3. Strategic Location

The capital city of the UAE is Abu Dhabi, situated on a small island. It is linked via three multi-lane motorway bridges to the mainland. The airways, land and sea make it readily available. Driving from Abu Dhabi to Dubai takes less than 2 hours and is known as the gateway between the east and the west because it is situated in a very strategic location. It is home to the Abu Dhabi Emiri Family and the UAE president, and is among the most important cities in the UAE, as it is the country’s capital.

4. Security

Abu Dhabi is considered one of the safest cities globally and has surpassed cities such as Vienna and Tokyo to be voted the safest city globally. The town has a strict customs system that all visitors have to go through. There is a range of security checks and inspection systems at Abu Dhabi International Airport to improve the city's security.

5. Numerous Malls, Festivals and Activities

There is a hot desert climate in Abu Dhabi, so much of the time is spent in malls and conference centres indoors. Not only are malls and conventions here restricted to shopping and serving every purpose, such as meeting friends, sheltering from the sun, etc. In addition to involving the local community, the different activities draw a lot of interest from international countries.

Future of the Hospitality Industry

The hospitality industry’s growth will help the country's economy and have allowed different tourism incentives, such as a growing quality of service, the renovation of old venues, and new infrastructure construction.

The development of tourism has boosted the number of people staying in the country, which has helped the hospitality industry expand and develop.

There is an increase in the number of hotels due to a rise in affordable accommodation and increased disposable income worldwide. The owners used to favour investing in luxury hotels earlier, but are now moving to lower market hotels as the hospitality market competition has increased.

The arrival of a more valuable number of tourists for the whole country's economy is a sign of hope as the number of tourists indicates more funds into the marketplace. This increase in funds will contribute to the country’s growth and development and help expand services and enhance infrastructure to attract more visitors.

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