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Home / Features / Dubai has a strong and dynamic tourism sector

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Dubai has a strong and dynamic tourism sector

Dubai Chamber of Commerce and industry indicated in a recent study that Dubai has developed a strong and dynamic tourism sector serving business travelers to the region, expatriates and their friends and families and regional and global customers and tourists. Dubai ranks among the top 10 most visited cities in the world. The tourism sector can be differentiated into number of market segments. The most basic differentiation is based on the motive for travel-business or leisure. Among the leisure tourists, there can be further differentiation among friends and families of large expatriate population in Dubai, the regional tourists from neighboring countries who travel to Dubai for shopping and entertainment and the tourists from different parts of the world who visit Dubai for its unique mix of shopping, sun and entertainment. According to a survey conducted by Dubai department of Tourism and Commerce Marketing, about two thirds of the visitors in Dubai are leisure tourists and one third is business travelers. The tourism sector comprises of an array of essential activities ranging from hotels and restaurants, food and catering, tourism activities including resorts, adventure sports etc. The cluster for the sector comprises of many core activities that are supported by the linked sectors and market segments as also by related institutional bodies to complete the chain of activities in the tourism sector. Among the core activities are the transportation activities led by airlines industry in Dubai, hotels and restaurants serving the tourists, shopping destinations attracting tourists to Dubai, entertainment destinations like the resorts, adventure sporting hubs etc and the tour operators active in Dubai and globally. These core activities are supported by various other activities in the sector that contribute substantially to the economic scenario of Dubai. Some of these supporting activities include food and catering industry, facility management and cleaning services at many of these core industries, local transportation for the tourists, and local financial and health services catering to the visitors in Dubai. Other sectors in Dubai like the finance and construction sector provide the push to tourism sector from the demand side, of both the business travelers for these sectors and also the friends and families of large number of expatriates working in these sectors. The logistics sector smoothen the value chain of the economic activities in the tourism sector. Tourism sector is also supported in terms of competitive conditions and business environment by industry associations and regulatory bodies like DTCM. Dubai tourism sector has been able to combine phenomenal capacity and supply growth with rising price level. Thus the demand for tourism sector has outpaced the substantial supply of services in the economy. The factors driving this trend are a mix of natural advantage gained by its geographical location and developed advantage in terms of aggressive infrastructure development. For the airport services, airlines, quality of hotels and services and all such tourism related infrastructure, Dubai ranks among the top destinations globally. Besides the law and order and social conditions of Dubai has gained it a reputation of being a safe place for tourists and this hugely helps the sector. The demographic trend of large number of expatriate population also boosts the demand for the sector in terms of the friends and families of resident visiting the city in large numbers. In addition well planned and targeted events like Dubai Shopping Festival also attracts large number of tourists. The tourism sector derives huge support from the policy makers and has been able to stay dynamic and meet the changing needs and preferences of the tourists very well. Presence of strong related sectors like retail, finance, construction and others, provide support to the sector as well. The sector, however, needs to coordinate its activities on many fronts to market Dubai internationally instead of efforts by different agencies in many directions. Also over the period, Dubai has gained the reputation of luxury segment tourist destination. With highly competitive market globally, extending to mid market budget offerings will further boost the demand levels in the sector. Dubai is placed higher than its regional peers and a little behind its global competitors in terms of travel and tourism competitiveness. In the World Bank’s Travel and Tourism competitiveness score 2008, UAE ranked 33rd among 133 countries accessed, much ahead of neighboring countries like Qatar, Bahrain, Egypt etc. Key global competitors like Switzerland, Singapore and Sweden, however, were placed much higher. The sector by its nature is very susceptible to any change in global growth and demand conditions. This inevitable risk needs to be factored in the growth plans for the sectors along with strategy to face the challenges arising out of such a risk. Following the global economic slowdown, Dubai’s tourism sector has to face the challenges of slowing demand levels in key customer segments in the short term. Most of this challenge has emerged in form of fast fall in prices and lowering of occupancy rates. With significant capacity additions planned over next few years in the sector, the sector has to watch out against any demand supply misalignment as well to check the falling prices. However, flow of regional tourists for holidays and shopping has continued to grow at stable pace. With the large number of expatriates’ population, the number of their friends and families visiting Dubai has also continued to grow. In addition, recent pick up in number of tourists arriving at Dubai airport suggest that the flow of business travelers has picked up as well.

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