Dubai tourist inflows to drop in 2009

Dubai: The UAE is likely to see a drop in tourist arrivals from Europe next year due to difficult economic conditions facing the European outbound market and the fall in the euro's value against the dirham, an industry expert said.

"Europeans have seen a decline in the value of their investments and real estate. Combined with the unfavourable exchange rates between European currencies and the dirham, which has increased the cost of visiting the UAE by at least 25 per cent, the UAE faces a challenging time in maintaining the growth enjoyed over the past three years," said Alex Kyriakidis, global managing partner of hospitality and leisure sector at the auditing firm Deloitte.

Still, the UAE's tourism sector will be in good shape compared to other regions such as Europe and the US where the downturn will be severe, he added.

Kyriakidis said the long-term development vision of the UAE must continue and current conditions should not cause panic.

Europeans account for about 40 per cent of the UAE's total tourist arrivals.

"No one is immune from the global economic crisis. The key is in broadening the UAE tourism offering to meet the needs of today's tourists. There will be increased emphasis on value for money and the UAE will be competing for European visitors with Egypt, Turkey and East Asian destinations, which have not been affected by the strengthening of the dollar," he said.

Hotel bookings for 2009 are expected to be weaker and revenue per available room will be under pressure. New hotel supply will slow down in short term and recoup when the market returns, Kyriakidis said.

"The mid- and limited-service market is currently an underdeveloped sector in the UAE's hotel supply and should be addressed promptly. Hoteliers should also look to different sales channels such as tour operators to broaden the distribution base," he said.

Another way of bringing more tourists to the UAE is to continue developing a diverse range of attractions such as theme parks, cultural attractions, museums and nature reserves to widen the appeal to different segments such as families.

Hotel performance remained strong in Abu Dhabi with revenue per available room (revPAR) up 45 per cent while Dubai's revPAR grew 6.7 per cent year-to-October 2008 according to research firm STR Global.

It suggested the UAE should boost its marketing efforts to ensure that hotel performance remains good.

Among other steps, the route expansion plans of Emirates and Etihad Airways, the key drivers of the UAE's tourism, should be aligned, said Rob O'Hanlon, hospitality and leisure industry partner at Deloitte Middle East.