Economics and Tourism Industry in UAE - Essay Example

Tourism Industry in UAE Introduction The tourism in UAE and the whole Gulf area remains comparatively immature. Up to the end of 1950s, there existed no hotels in Dubai; guests had no alternative but to live with their hosts or friends. The following twenty years saw Dubai grow the major items for passengers. The global airport remained launched in 1959. Stimulated by the realization of oil in 1966, a few young hotels started to open to cater for the requirements of Dubai’s developing economy. In the middle of 1980s, formation of major organizations began that came to force the growth of the Dubai tourism group. During 1985, the state developed Emirates Airlines, using Dubai airport like its major center. During 1989, the Dubai Tourism Board remained established thus focusing on worldwide advertisings and posing Dubai like not only a business center but also an alternative objective. It was during 1997 when it changed to the Department of Tourism and Commerce Marketing (DTCM) (Baumgarten, 2010:98). The DTCM being the owner of the tourism industry, together with the aid of several major institutions and organizations of the group, conducted the initial yearly Dubai shopping celebration in 1996. During 1997, Jumeirah Group remained developed like a hotel organization industry. The industry currently has a portfolio of the great end hotels in the whole globe. These organizations fastened their development of the group, and by 2000, 3.4 million tourists’ remains visiting Dubai every calendar. Towards the start of the millennium, Dubai’s tourism group started developing at an almost quicker speed. Not at all witnessed previously ideal estate schemes introduced Dubai international awareness. The Burj-Al-Arab, that started operation during 1999 was the initial 7 star hotel in the globe. The Palm Island schemes, commenced in 2002, remained the initial of that type. Foreign currency remained received in Dubai as rich tourists visited to live at its classic hotels, or to buy a few of its worthy waterfront assets. Between 2006 and 2010, the figure of hotel beds increased at a yearly proportion of near to 10%. Improving distribution caused hotel renting to shift from 82.2% in 2007 to 66.8% in 2009. The size of Dubai’s Global Airport remained expanded during this time. Analysis Size, ownership and employees The tourism industry owned by the DTCM is expected to develop with almost a 15% of the nation’s GDP in the next ten years and have a value of Dh 277.8 billion (US$75.62bn) yearly. However, the 2007-2009 financial disaster remained specifically a shock on Dubai’s tourism group, as its concern on great destination expatriate tourists left it at risk when international demand declined. Accommodation in hotels reduced to 19% from 2007-2009 and income for each accessible cube reduced from $235 in 2007 for a night to $163 for a night in 2009. During 2010, nevertheless, the group started reestablishing; renting increased by 3%, and income for each accessible cube went up by $35 for a night. Ideal GDP increase for travel and tourism economy was -17.8% in 2010. Despite the previous changes, the now scheme path will witness Dubai developing its hotel cube size by higher than any other town in the globe (Scott, 2010:76). The tourism industry in Dubai has shown increased growth in the number of people employed each year with the figure rising from 166,000 people to 173,000 people, and its expected to grow up to 236,000 people in a year in the coming ten tears. Currently 98 million people have employed in the industry. Structure of the industry The tourism industry in UAE constitutes a very competitive market structure with very many airlines in the nation. The competition leads to creativity and innovation in a bid to compete in the market for long. During 2010, Dubai’s hotels had the greatest income for each accessible cube in the globe costing $198 and Dubai attained position 10th in the globe considering the renting rate of 78.6%. During 2008, Dubai remained recognized like the highest costly town in the globe for restaurantsDuring 2010, 6.5 million tourists lived in Dubai hotels, recording the biggest figure in the area, leading to a total of $3 billion in hotel income. Tourism included 16.6% of the UAE’s GDP. Tourism remains developing with an 8.1% increase in GDP input from 2001. The UAE group remained positioned 30th in the globe and first in the area in the 2011Global Economic forum Travel and Tourism Report. The group remains extremely diverse and is fairing nicely as proved through increased hotel and restaurant charges. (Poser, 2008:113). Attracting sites for Tourists in UAE and the strong points Dubai remains situated between Asia and Europe and is inside a continuous flight from nearly the total main towns in the globe. Near location to European and Asian nations has drawn several visitors searching for sun and purchasing. Dubai’s middle position on the global map has further aided draw shipment travelers, several of whom remain travelling between Europe and Asia. The main attraction centers in UAE for tourists include the aquariums, bridges and tunnels, artificial islands, hotels, souks, shopping malls, churches, entertainment places, beaches, stadiums and sports venues, libraries, museums and recreational places, parks and zoos, exhibition and trade shows among other places. Dubai posses encouraging weather for six months of the calendar. With nearly lack of rainfall and temperatures seldom dropping past 20 degree centigrade downwards, Dubai is a simple and near target for several Europeans and Asian visitors searching for sunshine during the winter. A possible shortcoming of Dubai’s weather is that it becomes extremely hot I the summer months, a time when Europeans enjoy to have their yearly holiday. Dubai does not have the cultural tradition like that of its neighbors like Oman and Jordan. The standard of its beaches ranks below those in Indonesia, Thailand, or the Maldives (Svenja, 2009:33). The key significant element restrictions that have helped Dubai’s quest group have remained its good physical infrastructure, and the majority of immigration workforce. The physical infrastructure, specifically the quick developing airport, has offered Dubai’s quest group with the equipment to control its geographical site; 130 airlines perform externally from Dubai International Airport, travelling to 220 areas in six continents. Due to the progressing ventures in Dubai’s airport, the UAE has persistently positioned in the peak five of the GCR for airport infrastructure. It remained identified as the nice Global Airport in 2010. It remains the committed airport around the globe through traveler traffic. In addition, they have remained firm ventures to rigorously develop the local logistic infrastructure by latest roads and a metro scheme. The UAE has remained rising up the GCR for worthiness of road infrastructure and lately ranks at five (IBP, 2011:12). Dubai’s ability to draw less skilled expatriate employees remains specifically vital for a service department as tourism. Consequently, the unavailability of greater knowledgeable employees has led to the absence of managers in the firm. Moreover, there is absence of local residents in the tourism labor in all ranks; with some approximations proposing that extremely 1% of the workers in the tourism group are UAE citizens. Attempts have remained made to develop the condition as the Jumeirah Group’s ‘Emirates Academy of Hospitality Management’; however, not high success has remained achieved. The financial drawing closer of a job in tourism has no appeal for several residents offered the low salaries, majorly if the rest greater rewarding careers remain accessible. Another element that hinders residents from this department is its assumed reduced class in the community (Svenja, 2009:83). The failure of taking part by expatriates in the greater knowledgeable works may have a description through the truth that these industries remain operated by Emiratis, who want to occupy these ranks only with their colleague Emiratis. Emirates Airlines constitutes a solitary exemption, which employs many great knowledgeable expatriates, and remain for sure operated by expatriates likewise. The firm, great rewarding financial group in Dubai forms battle for greater knowledgeable resident talent. Dubai’s tourism group gains from the government’s firm balance sheet, and its strong financial group. The tourism industry in UAE has strong points in that it has a strategic location in between nations with a continous flight, great development in the infrastructure sector, ability to attract expatriates in the industry who provide cheap labor, strong economic base of the nation among other factors.ss The firms in the group have the capacity to control these foundations to fund their ventures (Qureshi, 2008:45). Demand and Supply Dubai’s need has demonstrated persistent increase from 4.3 million visitors in 2004 to 6.3 million visitors in 2008. This indicates an increase in demand and thus will lead to increase in supply of the tourist attraction services, goods, or materials. The current economic disaster reduced the pace of this increase. When the number of tourists visiting UAE increases, the demand for services, goods, and facilities also increases. This in turn leads to the increase of the prices of the items as well. The tourism industry enjoys success during this time. However, during difficult seasons or in case of crisis, the rate of quests diminish.This redundancy has emerged mainly from European and American visitors, which reduced from 2.8 million to 2.4 million quests. Shockingly, demand from surrounding Arab nations grew in the same time from 1.5 to 1.7 million. As said earlier in the factors favoring Dubai’s tourism industrial growth, Dubai lacks several favoring factors of cultural tradition locations like Jordan and Oman, and consequently tourism has increased greatly due to venturing in infrastructure. However, Dubai’s luxurious buying and great end hotel firms greatly forced demand from great end visitors. As it pertains Singapore, Dubai has constructed a foundation venture of airports, ports, and buying infrastructure that is enough to force forthcoming demand with no urgency to persistently construct big schemes. The graph illustrates the shift in demand and supply in the occupancy of hotels (Poser, 2008:123). Available from: https://www.google.com/search?[accessed on 18 May 18, 2013]. The above graph shows that an increase in the demand of a tourism item from D1 to D2 will lead to increase in the price of the same from P1 to P2, due to the increase in quantity demanded. Another key force to Dubai’s demand was the tourism leading from its expatriate travelling travelers. Therefore, when the economic disaster struck, these expatriate visitors reduced their expenditure on luxury and the figure of planes flying through Dubai Airport faced a small reduction, leading to a reduction to the figure of Europeans and Americans going to Dubai. GCC quests, on the other side visited not only for shopping centers and hotels; Dubai’s comparatively liberal rules, as illustrated through having the greatest alcohol demand per capita in the area, contrasted to the surrounding nations, it has drawn quests from its further preservative Arab neighbors. It could take the rest of the GCC governments an extended duration to replicate Dubai’s liberal rules without leading to political unrest, offering Dubai a brief front in this sector of tourism (Reiser, 2011). Although the minor ideal need for tourism, Dubai’s strategic positioning and ahead-geared rules facilitated the growth of four groups that had much influence to the growth of the tourism group: the logistics, ideal estate, retail, and funds groups. In the logistics group, the airline firm offered the key significant push up for tourism. Dubai’s airline firm commenced with the growth of the Dubai International Airport during 1965. From then, the airport has grown to remain the involved airports in the Middle East and the 15th committed airport in the globe through traveler traffic with more than four million travelers dealt with in March 2010. The airport operates more than 130 airlines and 220 targets in 6 continents. More of the traveler traffic passes through Emirates Airlines, which is the international biggest Airline, going to 106 targets with 142 aircrafts and operating 27.5m travelers in 2010. The graph illustrates the shift in supply and demand in the tourism industry in UAE. Available from: https://www.google.com/search?[accessed on 18 May 18, 2013]. Emirates Airline has consequently acted a significant post in marketing Dubai like a global visitor’s target. During 2010, Al Maktoum International Airport remained started and will be the globe’s biggest airport with a potential to accommodate 160 million daily travelers when it is completely operational, which indicates that the Airline firm will progress to remain firm force for Dubai’s tourism group. Past airline logistics, Djbai has furthermore constructed ports that accommodate cruise ships from all over the globe, and had currently received a prize as the Middle East’s frontier cruise port in 2010. As more than 80% of the quests go to Dubai to buy, Dubai’s retail firm has remained a vital force to the growth of the group. To fulfill the requirements of these buyers, Dubai has constructed further retail area than the rest of the GCC nations and possesses the much retail area under growth. These areas remain inhabited by popular international brands. For real in 2010, Dubai had increased worldwide retailer presentation than any other town with the exemption of London (Scott, 2010:56). These retail buildings or malls have furthermore constructed wasteful items that constitute an enclosed black diamond ski incline, an enclosed sky plunging, and aquariums. The ideal estate group has remained the key force for the growth of hotels, with aid from the funds groups to fund the schemes. Jumeirah cluster acted a significant part in establishing the Burj al Arab, which acts as a key trademark for Dubai. Dubai containing more than 52,000 cubes remains positioned like the fifth biggest figure of accessible cubes in the globe’s towns. These hotel cubes remain mainly high-end as Dubai’s cubes provide further income than the rest of towns in the globe. Future forecast The UAE tourism industry aims at imporoving its future performance through: 1. Employing of expert staff in the industry to bring new ideas and formulate competitive mechanisms for growth of the industry 2. Developing infrastructure to enable and attract more tourists into the country; this will ensure they have the required comfort while in the country. 3. UAE policies should have slight changes to facilitate incorporation of the private sector and assimilation of the expatriates into the industry. 4. Developing a mechanism of making the people form different parts of the world aware of the various attractive sites and services offered in UAE, for example, devising an advert. 5. Offering enough facilities for ensuring that the tourist is comfortable and feels welcomed apparopriately, for example, safe and good parking space, tourist vans in good condition and many more. Challenges/ weakness in the tourism industry in UAE Dubai tourism group has several weaknesses, which prevent its competitiveness. Dubai’s concern on drawing Europeans and Americans for high-end tourism and buying has made it become more at risk to global declines. As demand declines, visitors have no otherwise option other than 4 or 5 star hotels and select to visit other places. As there exists no cultural, real, or historic drawings, the consumption remains very cyclical as the 2008-2009 disaster demonstrated. With the lonely concern on having the latest and nice hotels, there is currently important hotel over potential. This appears to be due to the group’s dominance by state owned organizations, which do not have a gain concentration or appropriate corporate governance and remain prohibiting battle. The UAE policy has restrictions concerning the employment of the expatriates and involvement of the private sector in the torism industry. This hinders performance and cost efficiency mechanisms to remain employed in the industry. To the level, there is a personal department; it does not appear to have involvement in modeling the group as the DTCM does not appear to have well performance (Blanke, 2011:78). Perhaps during the economic rise from 2002-2207, there remains no requirement for partnership, however, now the lack of association appears to remain preventing rules to expand the economy. Another key matter with the Dubai tourism group remains area battle. Abu Dhabi, Qatar, and Oman have nice favorable factors in terms of past drawings. The total three targets remain making important ventures in infrastructure, hotels, and cultural drawings. Every one remains looking for means to vary and Dubai should perform faster to live in front of these competitors. Other weakening aspects in the tourism industry in UAE include the poor infrastructure, occurrence of natural disasters, stiff competition from neighboring nations, changes in seasons in the country, political turmoil in the Arabic nations, fluctuation in the cost of the dollar, poor economic growth among other many factors (Blanke, 2011:48). Recommendations for the Dubai Tourism Cluster Better Governance of SOEs and Eventual spin-off As an initial chance, SOEs like the Jumeirah Group require to acquire nice guidance by writing of yearly accounts and employing of experts organization. This will assure that these firms acquire revenue seeking rules and just create ventures if profitable to do so and not at the helm of the leaders of Dubai. It appears that group firms remain progressing to venture in latest hotels although the balancing off of the consumption. Drawing unique kinds of visitor will permit ideal demand to start guiding distribution. In addition, Dubai must evaluate at selling off governmet-possessed firms either to the personal section, or to the civic markets to assure appropriate leading and private section battle (Bingeli, 2010:102). FDI and SMEs to Form Competition For a non Middle East private section to have permission to venture and bring skills into the group, the UAEs FDI policies should have transformation to permit 100% expatriate possession. Moreover, the DTCM must carry out a marketing support to have foreign tour performers to venture in organizing local activities in Dubai, permitting group firms to possess a straight, local view into consumer likes. Dubai’s SME rule must have a destination at the tourism group to improve competition. Private Section Commitment in New IFCs The DTCM, although remaining efficient to form first demand like the Dubai Buying Tradition, has reduced in significance and remains not performing appropriately. Current IFCs at the mid group stage for hotels, buying and restaurants require having formation to incorporate the private section in-group initiatives. This data may go back until it reaches DTCM, which has great extent of state attention. Change the Aim for the Existing Infrastructure Towards Household Tourism Tatweer, a Dubai SOE, has ventured $63 billion in Dubai land, a household concerned entertainment structure containing sports arenas and a six flags action park among several in an effort to draw a new kind of minimal cyclical need. Instead of constructing latest hotels, Dubai must change the aim of the already established hotels to concentrate on household tourism, increasing accommodation. This may have achievement through marketing and by forming car and bus links to Dubai land, as Orlando hotels act with Walt Disney Globe. The private section must remain motivated to venture in Dubai land, maybe through forming the whole region a tax-free area permitting 100% FDI. Even when household visitors use minimum that buying quests, they will live in Dubai for an extended period (Baumgarten, 2010:98). Regional Merging to Become Entry to UAE The above suggestions will aid to steady and broaden Dubai’s demand. However, area rivalries will get on trying Dubai and lead visitors away. Dubai contains the much-developed airport in the area, which links the main global towns. Dubai must leverage this to change to the area quests center. Dubai must associate with Abu Dhabi, Oman, and Qatar to form an area visit same to the Mayan area visits of Central America. Dubai must guide gathered marketing for the area to improve general demand. From Dubai’s favorable factors remain the leanest of its neighbors, Dubai must use its infrastructure ventures as its competitive gain. As visitors reach Dubai for linkages, Dubai must provide 5 to 12 hour visits same to Singapore’s Changi Airport’s visits, ably providing reduced hotel proportions for quests living for 24 hours. This could place Dubai as the center for area visits and reduce area competitor’s ventures in atmosphere infrastructure, filling Dubai’s place as the area guider (Richard, 2010:89). Bibliography 2012. United Arab Emirates Mineral & Mining Sector Investment and Business Guide. [s.l.], International Business Publications. Baumgarten, J. and Kent, G. 2010. “Travel and Tourism Economic Impact, United Arab Emirates, 2010.” World Travel and Tourism Council Research Report. Bingeli, U. et al .2010. “Competitiveness and Growth in the Tourism Sector: Sector Blanke, J. and Chiesa, T. 2011. The Travel and Tourism Competitiveness Report 2011. Geneva: World Economic Forum. 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