Hospitality Industry

Introduction

A country continually needs to diversify its economy and explore new avenues of increasing the revenue for the economy of the country. This will, in turn, increase the Gross Domestic Product (GDP) of the country. Keeping this in mind, the government of the United Arab Emirates has also made initiatives to alleviate the condition of the Hospitality industry in the country. This move will significantly reduce the countries dependence over the Oil and Gas sector and will provide an additional source of revenue for the country.

The economy of United Arab Emirates was based mostly on the oil and hydrocarbon sector. Still, due to the various efforts of the government, there has been a remarkable growth in the hospitality industry in the United Arab Emirates. The development of the Hospitality Industry has been complemented by the increase in the travel and tourism business.

The increasing number of businesses being set up in the country is also a reason for the increase in the footfall. With the availability of strategic location, easy transportation and logistics services and dedicated Free Zones, setting up a business has become very easy. The increasing number of people coming into the country has also created a necessity for the better hospitality industry.

The Global Hospitality Scenario

There has been a significant increase in the hospitality sector all over the world. The activities of the hospitality sector concern itself with travel and tourism and the hotel and accommodation industries. With the development of technology and the increasing impact of the internet, the world has become a smaller place.

The ease in moving from place to place, a simplified process of booking tickets for journeys and the increasing effect of globalization has resulted in an increase in the number of tourists that visit new locations. There has also been a constant fall in the cost of travel and a gradual increase in air transport which has resulted in more number of people going abroad either for business or for pleasure.  

All around the world, the hospitality sector and the travel and tourism sector are now considered as the primary sectors for job creation and the economic development of a country. Many countries such as Brazil, India, South America, United Arab Emirates and many more have eased the process of setting up a business in the country which has opened a gateway for both travel and tourism industry as well as the hotel industry.  

Hospitality Industry in GCC

With the recent fall in the oil prices and the various geopolitical issues, the GCC hospitality sector has seen a growth in numbers. The increasing tourist attractions, multiple initiatives from the side of the governments, the increased government spending has helped in attracting millions of international tourists from all over the world.

The World Expo 2020 in Dubai and the FIFA World Cup 2022 in Qatar have spurred a growth in the hotel segment in the GCC countries. There has also been an increase in the tourist destinations in the GCC and the places to stay. The number of rooms in the GCC has seen a rise in the hotel rooms to meet the demand of the tourists. There are many more projects worth over 200bn USD in the pipeline, which will help fulfil the anticipated requirement.

The Meetings, Events, and Incentive travel market (MICE Market) is anticipated to grow further in the GCC countries. This means that Along with the spending on shopping and entertainment, the expenditure on business-related activities will also increase, which will, in turn improve the economy of the GCC country.

The increase in the future demand for better and an increased number of hotels has sparked a race for expansion among the luxury and the mid-market hotel segment. The active role of the governments of the GCC countries in building the airports, hotels and related infrastructures will help in increasing the passenger handling capacity. May other initiatives such as Visa on Arrival and No cost Visa will play a very vital role in creating a seamless experience for the tourists. The changes and innovation in the hospitality and tourism industry will benefit the end customer and allow him to make better and informed travel decisions and also have a higher quality of experience.

The Current State of the Hospitality Industry in the United Arab Emirates

With the intent to diversify the economy of the country, the government has looked into various sources of revenue. Earlier the United Arab Emirates was considered as a major oil-producing country. Still, by the multiple initiatives taken by the United Arab Emirates government, the country now hosts a large number of tourists from all around the world. It is also expected that by the year 2027, the hospitality industry will contribute more than 314 Billion Dirham to the GDP of the United Arab Emirates.

The hospitality sector of the country along with the tourism sector, has established itself as the sector which provides the most employment in the country. Not only the increasing work helps the economy of the United Arab Emirates but will also help in bringing in new funds for the economy.

Dubai is now considered as the heart of the tourism industry for the United Arab Emirates, and the country keeps developing new tourism projects. More and more tourists are coming to the emirate, and it is projected that more than 20 million tourists will visit Dubai in the year 2020.

The Hospitality industry in Abu Dhabi, Sharjah and other emirates have also experienced are tremendous growth. As of October of 2018, Abu Dhabi was visited by over 3 million tourists. The city also boasts of 166 hotels and by 2020 more than 36 hotels are set to open in the city. Similarly, Sharjah welcomed more than 885,000 guests at its many hotel properties, and Fujairah had a count of 22 hotels by the age of 2016. The tourism development authority of RAK, The Ras Al Khaimah Tourism Development Authority (RAKTDA) has set a target of attracting at least three million tourists annually from all over the world by the year 2025.

UAE Historical Performance by Occupancy Percentage (2008 – 2018)

Reasons for the growth of the Hospitality sector in the United Arab Emirates

There are a number of factors because of which there is a growth in the hospitality industry of the United Arab Emirates. The main reasons are explained below:

1. Accessibility

The strategic location of United Arab Emirates is one of the primary reason for the growing hospitality industry. The United Arab Emirates is easily accessible and is located at the confluence of Europe, Africa and Asia. A third of the world’s population is only a 4 hours’ flight away from the country. Many international air carrier, as well as the indigenous ones such as Etihad and Emirates, provide their services in the country. Dubai also boasts of the largest airport in the world, Al Maktoum International Airport in Dubai.

As this country can be easily reached from three continents, it has become a primary logistic location. It is straightforward for people to transport goods or raw materials from different part of the world, making the United Arab Emirates a hub for conducting business.

2. Increasing Disposable Income

The world is now a smaller place, and every information is available to everyone in a matter to minutes. This freedom of knowledge combined with the rising disposable income of the people has resulted in the increasing numbers of tourists coming into the country.

These tourists can come to the United Arab Emirates either to set up a business, for religious and cultural reasons, for recreation or medical purpose. Each and every goal can be fulfilled in the United Arab Emirates. 

The United Arab Emirates has gradually become a destination for the culturally inclined. The architectural style of the largest mosque in the United Arab Emirates, Sheikh Zayed Grand Mosque in Abu Dhabi, comprises of the myriad Islamic forms and attracts many visitors (almost 6 million) during the time of Ramadan. There are many cultural attractions and museums all over the United Arab Emirates.

The Dubai Museum and the Al Fahidi Fort provide a glimpse of the history of the country. Also, the old souk and the traditional markets of Dubai deliver us a sight of the enchanted land. Dubai has recently finished the construction of "Museum of the Future" which will help to generate new and innovative designs.

This, along with the rich cultural history of the emirates of Ras Al Khaimah and Fujairah has made the United Arab Emirates a must-visit place for both worshippers and architecture enthusiast alike. The Al Ain Oasis, which is 145 km east of Abu Dhabi, is one of the oldest inhabited settlements of the world and is also the first UNESCO World Heritage Site in the Middle East.

1. Shopping and Sporting Events

Shopping is a fundamental driver of tourism for the United Arab Emirates. The country has various shopping malls, and the Dubai Shopping Festival provides an opportunity for all the shoppers to buy a range of products at very modest prices. This event has become the face of Dubai, especially for shoppers all around the world.

Another Landmark for the country is the Mall of the Emirates. This mall is developed and owned by Majid Al Futtaim and comprises of an indoor ski resort, a movie theatre and innumerable dining and retail outlets.

There are also sporting events such as the Mubadala World Tennis Championship and the Formula One Etihad Airways Abu Dhabi Grand Prix. The Special Olympics were also held in the United Arab Emirates and along with this many world-renowned sporting events are held in the country which draws in a number of tourists. 

2. Entertainment and Recreation

The geographical location and the topography of the country provide many different types of recreational activities to the tourists such as camel riding, Sky diving, desert expeditions etc. The United Arab Emirates is also home to the Sir Bani Yas Island which is a wildlife reserve and home to a number of endangered species. The United Arab Emirates also has the longest zip line in the world and offers a world-class golfing experience in the Trump International Golf Club in Dubai.

Along with adventure and recreation, there are a number of theme parks and resorts located in the United Arab Emirates. Legoland Dubai, Legoland Water park in Dubai, Motiongate Dubai, IMG Worlds of Adventure, etc. are only some of the various theme parks in the country.

3. Health Tourism

An industry report in the year 2016 has suggested that Emirati healthcare will grow at 7% annually. In 2018 United Arab Emirates was one of the top 20 medical tourism destinations in the world. The world-class healthcare services in the country have allowed tourists to access to 40,000 healthcare professionals and more than 4,000 medical facilities. The medical tourism market is expected to reach a market value of 19.5 billion USD by the year 2020.

There is a separate free zone that has been dedicated to healthcare in the United Arab Emirates. Dubai Healthcare City was launched in the year 2002, and the main aim of the free zoneex is to provide high-quality medical services to people and attract tourists from all around the world.

4. Dubai World Expo 2020

Dubai World Expo 2020 is a six-month-long Expo which will initiate on 20 October 2020 and the conclude on April 10 2021. It is the first World Expo which will be conducted in the middle east and is expected to attract around 25 million visitors. The World Dubai Expo 2020, which will be held in the future acts as a catalyst for the economic growth of Dubai and the United Arab Emirates as a whole.

The World Expo is expected to create more than 300,000 jobs out of which 90% of these jobs will be created in the tourism and hospitality sector. For the World Dubai Expo 2020, the government has joined hands with the leading companies such as Mastercard, CISCO, UPS and many other big names to provide a fantastic experience to the visitors. 

Government Initiatives

The government of the United Arab Emirates has understood the importance of the hospitality industry in the economy and how this industry can help in developing the country further. Keeping in mind the importance of diversification of the economy, the government of the United Arab Emirates has taken individual initiatives for tourism and hospitality. These initiatives are: 

Dubai Tourism Strategy

This was a comprehensive strategy which was launched by the Emirate of Dubai in the year 2013. The Dubai Tourism Strategy has set a goal of attracting a minimum of 20 million visitors annually by the year 2020. In line with this strategy, the government will try to conduct and highlight more and more events and develop many more attractions for people all over the world

Sharjah Tourism Vision

The Sharjah Commerce and Tourism Development Authority (SCTDA) has partnered with the tourism sector and has developed the Sharjah Tourism Vision 2021. By the end of the year 2021, the tourism vision will help attract more than 10 million tourists from all over the world.

Ajman Strategic Plan for Tourism 2015 – 2021

The primary mission of the Ajman Strategic Plan for Tourism is to focus on the development of tourism in the emirate. This strategic planning will focus more on the development of effective partnerships which will allow for the growth of new and innovative solutions. The Strategic plan will help in developing Ajman as the destination of choice for tourists of all kinds.

The hospitality industry in the United Arab Emirates is all set to explode as there are many initiatives taken up by the government to solidify and expand the tourism and hospitality sector. The development of many new tourist attractions such as the Louvre museum in Abu Dhabi, the various theme parks and resorts and locations such as the Dubai frame is bringing in tourists from all over the world. In addition, the connectivity of the United Arab Emirates to the other parts of the world and the upcoming important global events act as a catalyst for the development of the hospitality industry in the United Arab Emirates.

Future of the Hospitality Industry in the United Arab Emirates

There has been a significant rise in theme parks, cultural attractions and medical tourism in the United Arab Emirates, which has led to the construction and development of more room for the increasing footfalls. The United Arab Emirates has understood that the development of hospitality industry will benefit the economy of the country and has let to various tourism incentives such as a rising standard of service, renovating old venues and the development of new infrastructure.

In the year 2018, the United Arab Emirates Welcomed 15.8 million tourists, and the analysts predict that by the year 2020, the number of tourists arriving in the country will reach 20 million. The growth in tourism has boosted the number of people staying in the country, which has helped in the expansion and development of the hospitality industry.

Due to a rise in affordable lodging and the increase in the disposable income of people all around the globe, there is an increase in the number of hotels. Earlier, the owners used to prefer investing in luxury hotels but are now turning towards lower market hotels as the competitions have started to rise in the hospitality market.

The incoming of a more significant number of tourists is a piece of good news for all the economy of the country as the number of tourists means more input of funds in the marketplace. This increase in funds will help in the growth and development of the country and will also help in developing the services and making the infrastructure better so that more tourists could be attracted.

How Can Commitbiz Help?

Who are we? 

Commitbiz Consultants stands precisely the same, holding the position of one of the best business consultants in the United Arab Emirates. Our professional experts are well-versed with the incorporation procedures and maintain a vision to accelerate your business.

What do we do?

As business experts, our core tasks are highlighted below:

• Provide business license
• Act as a catalyst between clients and the United Arab Emirates government

How can we benefit you? 

Standing as one of the top ten business consultants in the United Arab Emirates, we assist you in the following processes:

• Strategize to accelerate your business growth
• Streamline your business activities
• Comply with the legal rules and regulations
• Provide tailored business solutions
• Establish the business pillars post-incorporation process like accounting, taxation etc.

If you are planning to step ahead and set up your company in the United Arab Emirates, do contact us today-we’d be glad to assist.