The Profile of Hospitality in Dubai - Coursework Example

Task Introduction Dubai is known for its hospitality industry fashionable properties as tourism destinations and innumerable cuisines prepared by renowned chefs from across the globe. This paper intends to examine, analyze and evaluate the profile of hospitality in Dubai, assess opportunities of expanding operations and challenges that hinder international hospitality. Investing in the hospitality industry requires a vivid understanding of the cultural, social, economic and political set up of Dubai. More over, the knowledge of the cosmopolitan nature of Dubai is vital due to its large number of franchised brands (Rehman, 218). Essentially Dubai is one of the countries that form the United Arab Emirates (UAE). Different ethnic groups reside in the Emirates, some of the include Pakistani, European, Bangladesh, Indian and Emirati. It is significant to note that, Middle East, is burgeoning in numerous ways, which include politically, economically and demographically (Baum, 47). It is evident that, much of the region’s wealth is attributable to having the world’s largest deposits of easily extractable oil and tourism activities. Background information The tourism industry in Dubai and in the whole Gulf region is comparatively young. Until the late 19550s, Dubai had no hotels. Visitors would spend with their hosts. It is noticeable that, the following two decades saw Dubai grow tremendously in developing basic facilities for travelers (Baum, 49). The opening of an international airport in 1959 and discovery of oil in 1966 spurred development and opening of several hotels. The founding of the Emirates Airlines in 1985 and the Dubai Tourism Board saw Dubai attract investors and tourists from across the globe. The Department of Tourism and Commerce Marketing (DTCM) facilitated international promotion and positioning Dubai as both commercial hub and resort destination (Rehman, 217). The establishment of the Jumeirah Group in 1997 as a hotel management company has seen the development of a portfolio of high-end hotels in Dubai and across the globe. For instance, the Burj-Al-Arab was opened in 1997 as the first seven-star hotel in the world (Brotherton, 151). This trend has accelerating to the current state, which puts Dubai in the global arena in tourist attraction and foreign investment (Rehman, 218). Political trend The middle East is often professed by westerners to be tantamount with conflict, but it middle East has serene areas where many diverse nationalities congregate, work and live together in a harmonious way (Buhalis & Costa, 122). It is imperative to note that, the UAE is one of the peaceful places with Dubai having the highest influx of international workers who make up to 80% of the country’s work force (Rehman, 219). Dubai is politically stable, and it has developed a reputation for being a safe hub for people of diverse nationalities, who work for companies from all over the globe. It is a constitutional monarchy ruled by Sheikh Mohammed (Rehman, 215). Mohammed, who has been on the wheel of leadership since 1995, had a vision for Dubai as an international hub for business and leisure. Mohammed realized his vision for Dubai quickly by the establishment of business centers, tourist attraction centers, which included skyscrapers such as the Burj Khalifa. It is the tallest building in the world. Such building makes Dubai distinct from the rest of the United Arab Emirates. They act as tourist attraction centers. It is imperative to note that, Dubai has managed to raise numerous sophisticated and pleasurable buildings even on water. The Burj Khalifa is illustrated below (Tizabi, 321). Additionally, is a member of numerous global organizations and associations, which include the Arab League, United Nations and World Trade Organization, this trend has sustained healthy relationships with the Western democratic countries. This membership has strengthened Dubai’s internal political stability (Tizabi, 317). Culture and religion background It is vital to note that, Dubai has an immense cultural set up. Out of the two million people, only 100, 000 are citizens, the rest come from different cultural backgrounds across the globe. Arabic language is the national language but majority appreciate English to conduct business activities. Dubai’s religion is Islam. It pervades each aspect of life. It plays a vital role in understanding the culture and mode of conducting business. It is notable that, showing any element of impertinence to Islam is a stern and punishable offence (Tizabi, 311). The Islamic faith emphasizes in aspects such as honesty, respect, munificence and modesty. More over, an individual’s honor is paramount and supersedes every thing including money. The indirect style of communication, which does not result in a direct “no”, accommodates the cultural desire to save the face. While talking, they may leave less personal space than many other cultures. They consider stepping back as a sign of rudeness (Rehman, 215). The Arabs place a high value on civility. It is observable that, men shake hands when meeting or leaving, but their women counter parts do not shake hands with men, both Arab or non-Arab. When addressing and greeting each other, people use their first and last names (Tizabi, 318). Furthermore, titles are used so often to indicate status and seniority. The senior most members of a given group are greeted first. When indicating that, they are interested in each other, they ask each about the well-being of respective family members more than once. It is significant to note that Muslims take delight in their hospitality and any bid of hospitality should be acknowledged to safeguard the honor of the host. These are the customs of the Dubai citizens (Rehman, 215). It is essential to note that, the Dubai citizens are the minority, this means, there are other habits of living (Rehman, 215). Because, there are diverse nationalities, there is no common dress code. People dress according to their background but remain respectful to the Dubai culture. For instance, the Arab men wear a wobbly, ankle – length white cotton garment called a thobe, wile the women counter parts wear an abaya. It covers them from the shoulders up to the feet (Tizabi, 316). On the other hand, the western women wear western clothing, which covers, their shoulders, arms and legs. The western men wear a tie, elongated sleeved shirt and pants for business. The Muslim culture prohibits alcohol. It requires individuals to be licensed before handling alcohol (Tizabi, 312). This act has immensely facilitated enhancement of the Islamic culture. However, bars and restaurants are licenses to sell alcohol to visitors, though in a fixed amount. In addition, any public show of drunkenness is punishable in the form of fines or incarceration. In the work places, no specific dress code, it depends on the sector, for instance, public or private, international or local companies. It is notable that, the workplace is hierarchical (Tizabi, 315). Manager’s offices have a similar configuration back chair, a return unit with well-finished furniture legs. The owners of companies have enclosed offices, which are prolifically outfitted. Notably, the offices of international companies tend to reflect the culture and home office of the parent company. The high value of culture put relationships is part of the Arab culture; it enhances harmony even in business (Tizabi, 313). The Arabs believe and practice sending business to family and friends. Work in Dubai starts at 9.00am and ends at 8.00pm. This is inclusive of the morning and afternoon tea breaks and long lunch. Additionally, numerous prayer breaks are appreciated. The breaks provide time for bonding and connection, which results in business. Although during the month of Ramadan the schedule is relatively different, Muslims fast from sunrise to sunset; the business day is normally shortened to 2.00pm. During this period, the Muslims gather with extended family when the sun sets to eat and socialize (Tizabi, 315). This trend and culture work and life are tightly interwoven to form community. Men and women take various roles in the working places, it is however, noticed that, the traditional, religious and cultural norms have principally dictated the position of women (Yu, 119). Women have been skilled into fostering roles of mother and wife rather than being career –oriented. Women in the UAE have limited choices in the male dominated professional occupations. It is significant to note that, these factors contribute to poor progress towards gender equality in the UAE, particularly in the hospitality industry. Economic trend The growth of Dubai has been steadfast and has remained the envy of other Emirates. The country’s strong political, social and economic infrastructure as positively influenced its economic growth (Reisinger & Dimange, 312). The lofty revenues generated from natural resources such as oil and gas have been invested in social and economic infrastructure (Tizabi, 311). It is notable that, the countries’ economic doubled with open trade policies, which has enhanced appeal of the country for foreign investors. Tourism particularly in the hospitality industry has grown due to the availability of excellent leisure facilities, which include the world’s busiest airport, Dubai international airport (Tizabi, 312). Dubai international airport The airport is connected to almost 130 airlines across the globe. It has estimated 203 destinations. It accounts for 30% of all the passenger and aircraft movement in the Middle East and Africa region (Al-Amari, 216). Dubai’s monetary policy is centralized and controlled by the central bank of the UAE. Dubai’s currency is UAE Dirham (Al-Amari, 214). This currency is pegged on the US dollar. It is imperative to note that, the fixed exchange rate posed by the US dollar reduces volatility in export revenues. Dubai’s currency stability closely relates with economic health since it is a resource-based exporter. Notably, the pegged exchange rate system limit the power of Central Bank consequently minimizes options to curtail inflation and run money supply. It is evidenced in the fluctuation of inflation rates over the last decade that, managing the dollar-pegged system is a challenge. Consider the following, illustration of inflation trend since the year 2001 up to 2011 (Al-Amari, 213). The Dubai‘s economic trend in terms of GDP per capita from 1980 to 2011 is illustrated in a graph as follows (Al-Amari, 213). It is notable that, while oil has been fundamental to Dubai’s development since early 1970s, the non-oil sector contributes more than 85% of the total gross domestic product. Tourism directly and indirectly contributes up to 35% of Dubai’s non-oil GDP. More over, real estate and construction add up to 19.5% of the GDP. Business environment The administrative structure of Dubai and UAE in general is burdensome. Entrepreneurs in Dubai are required to operate under numerous licenses; more over the prices of acquiring such licenses is exorbitant. However, the government has implemented policies to improve the business environment. Another barrier to productivity is the preferential treatment extended to the Emirati citizens. This trend is hampering investments and making the business environment not conducive. Furthermore, productivity will continue staggering due to lack of women participation in the work force. This factors form a key parameter in making any investment decision in Dubai and UAE. It is notable that, the financial attractiveness of a career in tourism is not appealing for locals due to low wages and the perception that it is a low status sector. It is noteworthy to note that, the Dubai government endeavors in providing a favorable environment for business. For instance, the immense dedication to create liberal and free market policies for foreign investors, has immensely attracted numerous and diverse investors in various fields. It is noteworthy that, the investors in the Dubai Airport Free Zone, Dubai Cars and Automotive Zone, Dubai Healthcare City, Dubai Investments Park and many others enjoy government incentives (Prideaux & Laws, 145). Investors in the hospitality industry are not left behind in incentives, In essence, the hospitality industry enjoys high low rates of tax and the government directly supports the investors in this sector through the provision of low interest rate loans. Success in investing in Dubai can be attributable to the tight security provided by the government to both the local and the foreigners (Galindo, 246). Any one entering Dubai must have a passport, which is renewable upon expiry. It is vital to note that, Israelis nationalist are not allowed in Dubai. Dubai’s environment is characterized by vast stretches of desert land. There are over 3500 plants prevalent to the country (Galindo, 242). The birdlife in Dubai is considerably extensive. This study observes that, Dubai’s coastline offers an impressive array of natural life. Long-lasting sun and clear blue skies sum up Dubai’s weather, which experiences infrequent rainfall. Land policy and regulation in Dubai is complex. This study established that, 53% of foreign firms lack access to land and this hinders their commercial operations (Galindo, 232). It is noticeable that, formal econometric investigation confirms that firms in the Free Zone are constrained by the proscription of commercial land ownership (Galindo, 232). It is evident that, this problem of accessing land affects the behavior of entrepreneurs consequently becomes a key obstacle for regional and economic development. This implies that, creation of new and expanding of existing enterprises is not possible. This paper establishes that, the rate of investing drops by 20 to 30%. This problem of land in Dubai is immensely associated with institutional and regulatory problems. However, accessed land is costly (Galindo, 23). It is imperative to note that, establishment of a new budget hotel enterprise by a foreign investor requires numerous processes and it might stall due to the cost and complexity in accessing land (Galindo, 235). Budget hotels Budget hotels refer to those hotels that are easily affordable for the middle class people. There are numerous budget hotels in Dubai, which are affordable. Dubai leads the ranking of the world’s highest hotel occupancy rate (Galindo, 232). For instance, it recorded an occupancy rate of 86% in 2006. It is imperative to note that, investing in budget hotels is profitable due to the high influx of tourists recorded annually in Dubai. This study confirms that, 8,684,387 guests occupied Dubai’s budget hotel rooms while over 15 million guests were recorded in 2009 (Galindo, 238). Moreover, in 2010 and 2011 a boost in the number of tourists was recorded. Procedures and regulations followed before investing in this sector are similar with those of foreign investments. However, the difficult part is accessing land. Dubai land policy and institutions implementing it complicates the procedure of accessing land for investment. It is notable that, even the scarce land that is accessible to foreigners is too costly (Galindo, 245). Examples of some of the budget hotels in Dubai include the premier inn hotel, Burj Al Arab and many others. Investing in budget hotels in Dubai is profitable due to the high influx of tourists who visit the country annually. The budget hotel division in Dubai is better allied with the extra cost conscious attitude in the wake of the recession and is now professed as the next investment prospect in the Emirate’s hospitality industry. Dubai has launched several high-end hotels over the past decade. This reflects the country’s efforts to position itself as a sumptuousness destination (Okumu & Artiney, 213). It is imperative to note that, the hotel industry has broadened as a couple of companies have looked to capitalize on the lack of inexpensive accommodation in the Emirate amidst the financial predicament over the past two years. Opening up and broadening the attraction of Dubai into new markets to new sectors of demand that were previously, being priced out of the market is attributable to the vast number of Budget hotels (Galindo, 232). Branded international budget hotels such as the Accor, Express by Holiday and the UK’s largest budget hotel, the Premier Inn have promoted tourist from the countries of origin (Laws & Moscardo, 157). It is vital to note that, investments from foreign countries in this industry require branding for easy marketing. Some of the challenges facing the budget hotel industry in Dubai include, cost of construction and running operations (Lashley & Morrison, 149). For a budget hotel to be profitable, relevance of stringent cost model with low running and limited construction costs. It is significant to note that, the successful development of a budget hotel must conform to stringent development procedure that includes size of the room, food and beverage services and design of public area (Knowles et al, 312). This sector uses modular buildings to maximize effectiveness and minimize construction time. More over, for budget hotel industry to make profits, they need to push more units into the city in order to create the opportunity for economy of scale. Another challenge facing the budget hotel industry in Dubai is the struggle to achieve a relatively stable occupancy rates across superior and difficult economic periods (Galindo, 236). It is significant to note that these hotels strive to benefit from the weekend and leisure demand during periods of strong economic growth (Clarke & Chen, 112). On the other hand, a growing number of business guests looking to cut the costs normally characterize weak economic periods. Despite the potential obstacles that face budget hotels in Dubai, they are expected to become an increasingly vital component of the overall offering in the emirate over the next five years. Prospects are high that this industry is expected to jumpstart a current sluggish hotel-asset transaction market (Chen et al, 213). Furthermore, the potential of trading in the budget and economy hotels, in individual properties and portfolios is higher and profitable compared to that of large, full service hotels (Hall & Thomas, 168). In essence, the budget hotels are of particular demand to investors with capital to close quick cash acquisitions that are part of hospitality or long-term investment plan (Rehman, 213). Additionally, the emergence of budget hotels in Dubai is a positive sign. It indicates the market level of maturity that can offer a range of products that appeal to diverse sectors of demand (Harrison & Cathy, 214). It is evident, that investing in this industry, prospects of success and expansion are high. It is notable that, the slowdown in the US economy cannot affect investments and economy in Dubai because most of the investments for this part of the world come from diverse parts of the world (Rehman, 215). In conclusion, Dubai remains a viable place for hotel industry investment. This is evident and true because Dubai is a vast hub for tourists from across the globe (Rehman, 213). It is significant to note that, Dubai’s policy on liberal and free trade has continually promoted international investments in its soils. Additionally, the government’s efforts in promoting investors through the provision of grants and friendly tax policies and incentives attract investors in various sectors of the economy (Go Ferd & Pine, 87). However, by way of policy recommendation from the perception of maintaining Dubai industrial growth in the future, the study suggest that the economic authorities in the Emirate should enhance the lucidity and inexorableness of land market convention and dispute settlement in Dubai Main as well as reflect on introducing admittance to commercial land ownership in the Free Zones (Rehman, 217). References Baum Thomas Hospitality Management. New York: Sage Publications, p49, 2011 Brotherton Bart. International Hospitality Industry. London: Elsevier Science & Technology Butterworth-Heinemann Ltd, p151, 2003 Buhalis Buhalisand and Costa, Daniel. Tourism Management Dynamics. London: Elsevier Science & Technology Butterworth-Heinemann Ltd. p123, 2005. Baum Thomas. Human Resource Management for Tourism and Hospitality Leisure an International Perspective. London: Thomson Learning, p24, 2006. Chen John, Sloan Peter and Legrand, Watt. Sustainability in the Hospitality Industry. 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