Destination System Analysis - Dubai - Case Study Example

Destination System Analysis-Dubai (1) Destination Overview Location Dubai is located south of the Persian Gulf on the Arabian Peninsula. It follows Abu Dhabi in having the largest population and second largest land territory in the whole of emirates (Matly & Dillon, 2007) Climate The climate in Dubai is hot and arid. It is extremely hot, windy and dry during summer season with an average of 40 °C. It however lowers down to 30 °C during the night. It is usually sunny in most days throughout the year. Winter days have an average of 23 °C and are usually cool and short and 14 °C overnight. However, recently precipitation has increased enabling rain to reach 150 mm per year. (2) The Destination Tourism and Hospitality Governance System Political Structure A constitutional monarchy is the framework in which Dubai government operates. The monarchy has since 1833 been ruled by the Al Maktoum and currently ruled by Mohammed bin Rashid Al Maktoum who is UAE’s Vice President and Prime Minister as well as the Supreme Council of the Union (SCU) member. Eight members are appointed in two-term periods to the supreme federal legislative body; Federal National Council (FNC). In 1954 Dubai Municipality (DM) was established by Rashid bin Saeed Al Maktoum to provide services to citizens, local facilities upkeep and city planning. Deputy rule of Dubai Hamdan bin Rashid Al Maktoum chairs DM. DM comprise of Planning and Survey Department, Financial Affairs Department, Roads Department and Environment and Public Health Department. DM is also in charge of city’s sanitation and sewage infrastructure (Matly M & Dillon, 2007). Dubai Police Force was found in Naif in 1956. It is in charge of enforcing law over the emirate. Mohammed bin Rashid al Maktoum, who is the ruler of Dubai is the commander of the Dubai Police Force. Dubai just like Ras al Khaimah doesn’t conform to the federal judicial system of the UAE. Culture Unlike UAE culture that revolves around the culture of Bedouin, Islam religion and traditional Arab, Dubai is a cosmopolitan society with vibrant and diverse culture. However influence of Arab and Islamic culture on Dubai’s attire, music, lifestyle, cuisine and architecture is very prominent. Muslims pray five times a day with a weekend being Friday – Saturday. Friday is known to be a holy day to Muslims. The arrival of other ethnic groups and nationals change the cultural imprint of the city as a small, ethnically homogeneous community. However Dubai has been criticized for being a class-based society with migrant workers being in the lower classes. Dubai’s major holidays include Eid al Fitr which marks the end of Ramadam and National Day that marks the formation of EAE. Dubai Shopping Festival and Dubai Summer Surprises are the annual entertainment events which attract many shoppers from the region Economy Dubai’s economy has been built on the oil industry’s back though revenues from this industry and natural gas accounts for less than 6% of the overall Dubai’s revenue. Dubai is known to produce 11,000 m3 of oil daily and good quantities of gas. The share of Dubai in UAE’s gas revenue is approximately 2%. The oil reserves have reduced considerably and are envisioned to be exhausted in the next few years. Revenue from estate and construction accounts for 22.6%, export 15% while financial services accounts for 11% all of them being the largest contributors to the economy of Dubai. Top exportation destinations for Dubai are United States, China and India. Dubai is a hub for service industries like information technology and finance and a free trade in gold (Government of Dubai, 2010). Dubai government diversified its economy from trade-based oil to service and tourism that made property more valuable. Dubai has some of the tallest skyscrapers and projects in the world like Emirates Towers, Palm Islands, and the Buri Khalifa as well as the Burj Al Arab the world’s second tallest hotel. Dubai established Dubai Financial Market (DFM) in 2000 for trading securities and bonds. Dubai’s property market has experienced downturn since 2008 due to slow economic climate. Demographic According to Dubai Statistical Centre (2010), Dubai has a population approximately 1,722,000 (included 1,327,000 males and 395,000 females). Its population density is 408.18/km². It is known to be the second most expensive city in its region and 20th in the world (Ministry of Economy – Abudhabi, 2009). 17% of Dubai population belongs to UAE nationals, approximately 71% of Dubai population belongs to various nationalities like Indian, Pakistan, Bangladesh, Filipino and other Asian communities and nearly 3% emigrates who originated from western countries. A language variation dominates in Dubai. Besides the national Arabic language, other languages are spoken due to the diverse city culture of Dubai. These languages are English, Malayalam, Hindi, Tagalog, Urdu and Bengali. The state religion of Islam is Islam, though it is enriched with other religious communities like Christians, Sikh and Hindu (Data Dubai). (3) Destination Infrastructure Transportation According to Government of Dubai (2010). transport in Dubai plays an important role to its economy as many people visit the place for business and tourism every year. It is internationally and locally connected now that it’s an important city in UAE. Dubai has Dubai International Airport (DXB) and Jebel Ali Airport (JXB). DXB being a hub for Emirates airlines has won many awards for its excellence in services and designs. Its three terminals cater for both national and international flights. The airport is the busiest in the Middle East because of Dubai’s open sky policy. JXB has recently been renamed as Dubai World Central International Airport (Government of Dubai, 2010). Dubai also has local transport: buses, taxis and passenger ferries. It has busy system that is large having 193 routes. The buses run also to other areas of UAE as well as other surrounding countries. The transport minibus gets to most of other cities in Dubai. Taxis are the most frequently used in Dubai as a means of public transport. There are cabs operated by the government and those operated by private companies. Ferries (Abra) are a means of water transport that is used in the Creek. The main stations are Creek Park and Public Library. There are motor Abras that can accommodate 20 passengers. Accommodation Since the city is famous for wide range of high-rise and luxurious hotels, there is a wide choice of hotel accommodation to choose from. According to the Government of Dubai (2010), the modern hotels are within the city, in the mountains and on the beach. These hotels offer wide selection of beverage and food outlets as well as facilities and services of international standards. Foods and Beverages Imported consumer-ready products account for 75-80 percent of those sold in retail outlets while locally processed foods account for 20-25%. Almost all ingredients used in locally produced foods are imported. Locally produced food account for 15% of the market and include: Fresh tomatoes Seas food Vegetables Dairy products Poultry and eggs Attraction Services Dubai provides a wide range of attraction services to its residents and tourists. The jewel of excitement in the Middle East as well as anticipation is expected when travelling to Dubai. Dubai has awe aspiring escapades and magnificent development that it becomes hard to decide what to see first. There are a number of superb beaches in Dubai providing all types of water sports. Activities taking place on the beaches are water-skiing, paragliding, windsurfing, Jet skis, banana boats and kneeboard. Tourists can also experience deep sea fishing and diving, yacht charters and snorkeling trips. All these including turtle watching, coral reefs and fantastic sea life are done in the Arabian Gulf and the Indiana Ocean and the famous Musandam Peninsula. Diving courses are always provided to those who have enough time to experience diving in Arabia Gulf or Indian Ocean (Matly & Dillon, 2007). Other attraction service is the golf at Dubai Desert Classic which has over 10 world class golf clubs all year round. It is becoming an amazing golf destination contesting against Florida and Portugal. Horseback riding, horse racing and camel racing is another experience through mountain trails, open country or rides over beaches. Dubai also has all-night venues like comedy clubs, salsa dancing, jazz clubs, karaoke clubs and dance clubs. Theatres and regular results are part of life at night in Dubai. Burj Khalifa is an astounding observation deck in Dubai. It is situated on the 124th floor of the tallest building in the world offering amazing views of the Skyline of Dubai. The best malls in the world with unique designer malls are in Dubai. Dubai Mall is the newest providing every brand name available like Dubai Fountain with dancing waters, indoor ice-skating rink, family entertainment zone, underwater zoo and Dubai Aquarium. According to Department of Tourism and Mass Marketing (2009), markets of interest to visitors are Madinat Jumeirah and Dubai Marina Walk which provides outdoor arts and crafts market. Ski Dubai is where children’s ice park, snowboarding and skiing are available. Lessons are provided for those interested in learning the sport. For those visitors to take adventures, Wadi Bashing is the activity to take in Dubai. Wadis are dry riverbeds that follow streams flowing seasonally through rocky valleys. Visitors ride in four-wheels with drivers who are experienced. AquaVenture and Wild Wadi are world-class water parks in Dubai. AquaVenture is the largest water Park in the Middle East region. It has rivers, a private beach, speed slides, children’s playground and luscious gardens. (4) Destination Visitor Markets  The increase of visitors in Dubai makes UK its number one market. In 2010, Dubai attracted nearly 720,000 UK visitors. In 2009 UK visitors were nearly 715,000. However this is a decrease that was caused by a pre-cession compared to 2008 when Dubai had 850,000 UK visitors. In 2010, Dubai attracted over 8.3 million international visitors in total being a 9.4% increase over the year 2009. Visitors who stayed in Dubai hotels in 2009 were 6.6 million while those who stayed in apartments were 1.7 million. This increase was due to 33 new open hotels and apartments making Dubai have a capacity of 71,000 rooms. UK and Ireland visitors account for 10% tourist market of Dubai. India is the second source tourist market for Dubai after UK with 638,103 visitors. Around 70% of spending on tourism in Dubai is spent in shopping. Saudi Arabia and UK are the largest spenders with UK citizens spending up to AED2, 966 per trip in 2008. This is because UK pound is strong over other currencies making them have high disposable income. Saudi Arabia’s spending comes second with a total spending of AED 3,036 per trip. They also have high disposable income due to their petrodollars and the managerial salaries of the country are the highest in the world. Canadians, French and Australia spend the least money per visitor. Tourisms from these countries don’t spend long time in Dubai and are less likely to shop. Pakistani and India tourists a considerable amount of money; AED2, 346 and AED2, 800 per visitor respectively. These visitors stay longer in Dubai having come to visit family and friends (Department of Tourism and Mass Marketing, 2009) (5) Dubai Issues: business problems and opportunities Business Opportunities Dubai provides greater business opportunities for investors. It is not only about having a business that brings more money but one that will be easy to operate from government rules. There is an opportunity for real estate as the marketing for the business is still booming putting in mind that real estate investment for Dubai isn’t more popular internationally. Travel packages are another business opportunity for an investor especially for one that is focused more on inbound tourists and travel packages. Online auctions are not much available in Dubai and so entrance in this market may be a big opportunity to an investor. Some items are cheap in Dubai like dates, used cars and jewellery. Involving in export business of this item can be a booming business. The concept of franchise businesses is new to Dubai and therefore huge market is available for the same. Many people are looking forward to working in Dubai and therefore job agencies for skilled labours are needed. This is thus a niche business opportunity in Dubai. Young working couples who work in Dubai face problems of lack of childcare facilities. Childcare business is a niche business opportunity. Business Problems There is a problem setting up a company in Dubai. The owner can’t own more than 49% of the company. Dubai has a protective culture where it can’t allow a foreign firm to make decisions that would affect the local Arab population. There is also a problem of Dubai’s legal system. Dubai’s economy is dominated by government owned businesses. If a foreign firm has a dispute the other side will always be a government related firm. Solving a business dispute find the owner fighting defendants of government. References Department of Tourism and Mass Marketing. (2009). UAE Population Estimates: Government of Dubai Dubai Statistical Centre. http://www.dsc.gov.ae Matly, M. & Dillon, L. (2007). Dubai Strategy: Past Present Future. Harvard Business School. http://www.datadubai.com Government of Dubai. Hotel Statistics. Department of Tourism and Commerce Marketing Read More