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Middle East economies clock Expo boost

A Dubai Expo will yield economic benefits and reposition the region as a hub for innovation

Image Credit: Supplied
Teamwork: An Expo in Dubai will improve regional integration, as this rendering shows
GN Focus

The UAE and the region will see many benefits from hosting the 2020 World Expo, such as economic upgrade, improved employment and enhanced regional integration. However, the main benefit will be the repositioning of the Middle East as a centre of innovation.

The event will contribute €28.8 billion (or Dh141 billion) to Dubai’s GDP and €17.7 billion in added value, an Oxford Economics study quoted by the bid committee shows.

“If our country’s bid is successful, a World Expo in Dubai will attract new opportunities across the region and around the world, establishing new partnerships and creating a lasting experience for everyone who visits and participates,” says Shaikh Ahmad Bin Saeed Al Maktoum, President of Dubai Civil Aviation Authority and Chairman and Chief Executive of Emirates Airline and Group, in his capacity as Chairman of the Higher Committee for Hosting the 2020 World Expo in Dubai.

The Oxford Economics study expects the Expo will create more than 277,000 jobs between 2013 and 2021. The UAE anticipates about 25 million visitors, of which 70 per cent would come from outside the nation, a first in World Expo history.

The event is expected to cost Dubai a total of Dh14.7 billion, but its effect will be felt across the economy. “The Expo will be a major boost for all the sectors in Dubai, which will reflect significantly on the industrial sector,” Abdulla BelHoul, Managing Director, Dubai Industrial City, said.

Sarah Boumphrey, Head of Countries and Consumers at Euromonitor International agrees. “In common with other economies in the region, the government is embarking on a plan of diversification of the economy away from its reliance on oil production. Tourism is an important driver of growth and the Expo 2020 bid is important to the economy in this context.”

She says 2010 host Shanghai benefitted from an Expo-linked makeover, but this is less of a potential benefit for Dubai . Rather, she says, the challenge will be in terms of attracting tourists. “One concern is that the majority of tickets sold in Shanghai were to domestic tourists rather than overseas visitors so to have a real impact on the tourism sector Dubai will have to work hard to attract foreign tourists to visit specifically for the Expo,” she says.

Since the UAE aims to stage the best Expo in history, that shouldn’t be too hard. “The Middle East is not a region of conflict, war and tension. This is a region where 
cultures, civilisations and innovation can meet and flourish,” His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, said in a statement endorsing the bid. The event will help restore this role, he said.

 

Tourism

By Eduan R. Maggo | Deputy Editor - Supplements & Contract Publishing

 

Dubai is synonymous with opulence and luxury, known for its five-star resorts and luxe offerings; a venerable City of Gold, where the term is often taken literally. But the biggest legacy of the emirate hosting Expo 2020 could arise from a more humble place to change the face of tourism in the UAE forever.

Tourism forms the backbone of Dubai’s economy, but one of the concerns has been the lack of diversity in the emirate’s accommodation offerings. Not for much longer.

“While we will continue to build world-class five-star hotels and resorts, we will also focus on developing low-cost hotels to cater to visitors on a budget,” says Dr Ahmad Belhoul, Chief Executive Officer, Strategy and Tourism Sector Development, Department of Tourism and Commerce Marketing (DTCM). For example, Emaar recently unveiled a new hotel brand, Dubai Inn, which will be an affordable option for visitors.

Earlier this year, the DTCM also implemented a new hotel classification scheme to improve the clarity of and increase transparency about the type and quality of hotel rooms and accommodation available across Dubai. “We have worked closely with the hotel industry to ensure that our new criteria match the range of tourist accommodation in the market today. By adopting a multitiered framework of ratings, categories and designators, clearer choice will be provided to visitors,” Majid Al Marri, Director of Hotel Classification, DTCM, said at the time.

Dr Belhoul tells GN Focus, “All our stakeholders are working together to ensure Dubai realises its Tourism Vision 2020 and to position Dubai as the destination of choice.”

The Tourism Vision for 2020, approved by His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, includes the target of 20 million visitors per year by 2020 — an increase of almost 100 per cent on the 10.16 million visitors figure of 2012.

Dr Belhoul stresses the distinction between this figure and the 25 million visitors expected at Expo 2020. “The hotels, business and leisure facilities and attractions that will be developed leading up to 2020 will remain operational once Expo 2020 is over, should the UAE be successful in its bid to host the event.”

The rest of the UAE will also reap the rewards of the event. “We believe that the whole country will benefit,” says Mohammad Al Dhaheri, Strategy and Policy Director, Abu Dhabi Tourism and Culture Authority. “The Expo is expected to provide the country with global exposure to its tourism sector. It is also expected to support increased tourism employment driven by infrastructure developments. Those arriving for Expo 2020 in Dubai will be open to discovering other parts of the country and its many facets, both from a cultural and tourism perspective,” he adds.

Craig Plumb, Head of Research, Middle East and North Africa at Jones Lang LaSalle and real estate advisor to the Expo 2020 Bid Team, is confident Dubai is already prepared to host the event. “The emirate has a significant hotel supply and rooms are going to be extended,” he says. “The sector is already diversifying. We’re seeing two- and three-star establishments, while Dubai was almost exclusively four- or five-star over the past ten years,” he adds.

Plumb says alternative options such as guest houses could be considered, but this would require legislative changes.

Dubai currently has 603 hotels and hotel apartments with more than 81,000 rooms, says Dr Belhoul. By the end of 2015, he envisions 635 hotels with more than 90,000 rooms.

Elizabeth Winkle, Managing Director at STR Global, says the emirate’s welcoming visa policy and its position as a global and regional hub are its strengths. “Based on Dubai’s historical performance, product offering in terms of hotels, attractions and air lift, it is certainly conceivable that Dubai can host 25 million tourists by 2020.”

Says Al Dhaheri: “There is much to be gained [from hosting Expo 2020]. The event will deliver considerable global media coverage for the UAE. The visitor footfall to the country will rise with consequent impact on our hospitality, travel and retail sectors. We will also have the chance to demonstrate our rich culture and traditions to the anticipated heavy influx of overseas guests.”

Anwar Abu Monassar, Director of Operations, The Vision Destination Management, says in tourism, “All is a challenge and everything is a potential. The event will allow us to showcase worldwide what we can offer.”

He adds: “For Dubai, it will be important to address logistic infrastructures required from now to 2020, but I am confident this will be done. We know how to welcome people, it is part of the multiethnic society we live in and this will be demonstrated with the highest standards.”

 

Aviation

By Thomas Billinghurst | Features Writer

 

While the rest of the aviation world regressively restricted aerospace expansion, the UAE ploughed ahead, laying runways and building terminals furiously. While America concentrated on its domestic sector, the UAE explored new emerging territories and sprayed their footprints to each corner of the earth.

The result: the UAE became the world’s de facto air transport hub and its airlines transformed into harbingers of vigorous economic activity. Traffic has doubled at Dubai in less than seven years. Seat capacity has almost tripled since 2004. And Dubai International Airport (DIA) is projecting traffic of more than 65 million passengers for 2013, representing an eight million passenger bump from last year. According to Centre for Aviation (CAPA) data, DIA can expect to accommodate just fewer than 100 million passengers by 2020.

“The rate of growth of the UAE’s carriers has come about on the back of Arab airlines leveraging their centralised geographic location to allow one-stop connections to practically anywhere on Earth,” explains Saj Ahmad, Chief Analyst at StrategicAero.

The new age business models of codeshares, minority equity investments and aggressive network expansion have seen the UAE’s leading carriers pioneer the industry in recent years. Old legacy alliances have been outmoded by the forward-thinking of the UAE’s leaders and the carriers’ CEOs.

In a keynote address delivered in Washington earlier this year, James Hogan, President and CEO, Etihad Airways, highlighted the chasm between the old and new world aviation orders. Legacy airlines have simply outlived their usefulness, he said.

“Traditional airline alliances have evolved into slow-to-respond, bureaucratic organisations struggling to deliver added value to their member airlines, many of which are no longer compatible with each other,” Hogan said.

The centrality of Dubai to the rest of the world is one of the key aspects of the Expo 2020 bid, which would rival and complement one of the world’s mega biennial showcases — the Dubai Airshow.

Having run and organised some of the Gulf region’s leading aerospace and aviation events, including the Dubai Airshow for the past 13 years, Clive Richardson, Chief Executive of Access Group, an aviation events consultancy based in Dubai, tells GN Focus that should Dubai win the Expo bid, the aviation industry would be largely to thank and would consequently stand to benefit hugely.

“A winning bid would undoubtedly be a huge boost to the airlines and airports of the UAE, with Emirates, Etihad, FlyDubai and Dubai Airports likely to be the biggest benefactors. The location of Expo 2020, adjacent to Al Maktoum International Airport, would necessitate strong infrastructure development including transportation links and hotels, both of which would offer legacy benefits to the airport going forward,” he says.

 

Infrastructure and transport

By M. Sen | Special to GN Focus

 

The development of Dubai’s infrastructure and transport sector would be fast-tracked if the emirate wins its bid to host World Expo 2020 this November.

The International Monetary Fund’s (IMF) maintains that a successful bid will accelerate the pace of implementation of announced megaprojects in the UAE. These include Dubai Metro’s Dh5 billion Red Line extension to Al Maktoum International Airport in Jebel Ali and the Expo 2020 site, Mohammed Bin Rashid City, the Dh10 billion Theme Park Complex near the Jebel Ali port area, the Dh6 billion Bluewaters Island development featuring the world’s largest Ferris wheel, Dubai Eye, and the Dubai Design District, operated by Tecom Investments.

Work on plans for the extension of the Dubai Metro’s Red Line will begin as soon as the winning announcement is made. In this new phase of construction, expected to take around three to four years to complete and estimated at Dh5 billion, the existing terminus at Jebel Ali will be connected to the new airport, which is adjacent to the proposed Expo site at Dubai World Central.

Mattar Al Tayer, Chairman, Road and Transport Authority, and a member of the Higher Committee for Hosting the 2020 World Expo said in a statement that the Metro expansion will be the only major transport investment for the Expo. “All we need is a small chang. We don’t need a major change because the infrastructure is ready or almost ready,” he said.

Designed to be the world’s largest, Al Maktoum Airport is being built at a cost of $33 billion (about Dh121 billion), with a phased opening initially proposed by 2020. Following the economic crisis, the megaproject is now set for completion in 2027. It will be Dubai’s second international hub and will have five runways, four terminal buildings and capacity for 160 million passengers and 12 million tonnes of cargo across 16 terminals.

Cargo services were launched in 2010 and passenger services will kick off on October 27 this year, with two budget carriers, Nas Air and Wizzair, set to launch flights. Passenger capacity at the moment is seven million per year.

Jamal Al Hai, Dubai Airports’ Executive Senior Vice President for International Affairs and Corporate Communications, told Gulf News in April that a bid victory would hasten construction growth. “We do have a master plan of expanding quickly,” he said.

By 2015, it is estimated that 20 to 25 airlines will be operating from the airport. It’s being positioned as the world’s first purpose-built aerotropolis and will have hotels, shopping malls, support facilities and state-of-the-art maintenance facilities in its vicinity.

The current Dubai International Airport is also being expanded at a cost of $7.8 billion. Passenger flows through Dubai International, now the world’s second biggest for international traffic, jumped 13.2 per cent last year to 57.68 million people.

The Expo itself will be held at a new 438-hectare site, equidistant from Dubai and Abu Dhabi. The new Dubai Trade Center – Jebel Ali, to be housed at Dubai Exhibition City, is located next to the new airport and close to Jebel Ali Port. The logistical advantages of the site are clear, both for exhibitors — bringing in materials and constructing pavilions — and visitors. In total, infrastructure expenditure for the Expo is estimated at between $2 billion and $4 billion, according to organisers.

 

Retail

By Iona Stanley | Special to GN Focus

 

Should Dubai win the Expo 2020 bid, it will undoubtedly have far-reaching impact on its economy by accelerating growth, creating jobs and boosting opportunities. The organisers say the total economic output across Dubai will amount to €28.8 billion (about Dh141 billion), and add more than 277,000 jobs. The boost in tourist traffic during the six-month Expo will also translate into dramatic growth opportunities for the retail sector, and unsurprisingly, retailers across the board are extremely optimistic.

“Dubai is on par with London in terms of available Gross Leasable Area (GLA), which reflects its maturity. Any further growth in Dubai’s retail sector will be in line with the growing population and number of tourists,” Iyad Malas, Chief Executive Officer, Majid Al Futtaim Holding told Gulf News a few months ago.

Dr Amina Al Rustamani, Group CEO of Tecom Investments, which recently launched Dubai Design District (d3), also foretells retail sector growth. “From offices to retail units, manufacturing space to exhibition galleries, we are creating a community that will act as the heart of the industry within the Middle East by linking thoughts, beliefs, opinions, cultures and communities through encouragement of cultural exchanges between the host city and participating countries and alignment of innovation ideas with a view to stimulate economic growth,” she explains.

Beyond mainstream design, d3 also emphasises the luxury goods market, quoting a recent report from Business Monitor International (BMI), which predicts that the UAE’s retail market will be worth Dh151 million in 2015, of which 12 per cent is attributed to Dubai’s luxury goods market. d3 aims to capitalise on this by becoming a centre for high fashion and luxury brands. Around the world, tourists account for 40 per cent of luxury spending, and the potential of Dubai, which expects to attract 25 million visitors during the Expo, is substantial.

In a sterling example of international tourists driving retail spending, Dubai Summer Surprises’ 2012 edition succeeded in attracting 4.36 million visitors who contributed Dh12.3 billion to the Dubai economy in a span of 32 days between June and July. Dubai Festivals and Retail Establishment said in June that this reflected a 10.4 per cent increase over 2011. Of the 4.36 million visitors, almost 1 million were international tourists. Dubai Shopping Malls Group (DSMG), the city’s umbrella organisation of shopping malls offered Dh5 million worth of prizes during this year’s summer promotion, Summer is Dubai 2013. DSMG is one of Dubai’s many partnerships between public and private sectors, which is seen as pivotal to continuing industry growth.

In another indicator of impending growth, the combined sectors of retail, hospitality and entertainment boosted the UAE’s ad spend in the first six months of the year to $782 million (about Dh3 billion) in comparison to $755 million for the same period last year. According to data release this month by Pan Arab Research Centre (Parc), improved spending patterns in these consumer-driven sectors directly led to increased advertising spend. Retailers — together with their advertising agencies and media buying houses — believe that the keenly-awaited Expo 2020 announcement will skyrocket the UAE’s retail ad spend level.

 

Health

By Iona Stanley | Special to GN Focus

 

On the eve of Arabian Travel Market 2013 (ATM), Oxford Economics released a report at an event in Dubai that predicted that subject to winning the World Expo bid, approximately 277,149 jobs will be created in Dubai between 2013 and 2021. In the same week, Dubai Health Authority (DHA) unveiled a four-pronged strategy, which builds on Dubai’s long-term vision for promoting itself as a preferred destination for health tourism. The DHA strategy 2013-2025 seeks to deliver four goals — prevention and awareness, easy access to health services, quality and investment and competitiveness — through 43 initiatives that will be backed by an enhanced control plan and KPIs (key performance indicators).

There are several synergies between the announcements. According to DHA’s Director General, Essa Al Maidoor, with the total number of tourists growing by 2 million to 9.5 million between 2010 and 2012, Dubai can attract millions of medical tourists within five to ten years.

As health tourism becomes integral to Dubai, the city is ardently gearing up. Proposed projects under DHA’s strategy include three new hospitals, 40 new health centres and a Dh3 billion redevelopment of Rashid Hospital that will include 900 in-patient beds, 160 trauma centre beds, 150 treatment rooms in out-patient clinics, six new specialised centres and two five-star hotels.

After the Dubai Medical Tourism initiative was announced last year by Shaikh Hamdan Bin Mohammad Bin Rashid Al Maktoum, Crown Prince of Dubai, several measures have been taken to unify medical tourism procedures in collaboration with the DHA, General Directorate for Residency and Foreigners Affairs (GDRFA) and the Department of Tourism and Commercial Marketing (DTCM), among others.

The multistakeholder initiative says Dubai has more than 6,750 doctors and physicians speaking over 60 different languages. “We have amongst the best tourism infrastructure in the world, and we are seeing tourism numbers growing at more than 10 per cent year on year. We believe we also have the clinical expertise for certain services that can be further marketed to tourists in Dubai,” says Al Maidoor.

Dubai Medical Tourism has identified health services to attract international visitors as hip and knee replacement surgeries, dermatology and alternative medicine, wellness and spa treatments, Lasik procedures as well as aesthetic, cosmetic and dental procedures.

Planning extends to several other initiatives in the country through improvements in regulatory environments, capacity planning, empowering public-private partnerships and encouraging participation from private players. The UAE now offers a three-month medical tourist visa to foreign patients, which can be extended twice, as well as short-stay visas for specialist doctors who need to work in operating theatres for as little as a day. According to the Dubai Chamber of Commerce and Industry, the UAE’s health-care market is expected to reach Dh43.7 billion in 2015.

 

Sustainability

By Iona Stanley | Special to GN Focus

 

cross the UAE, public and private sector organisations are pursuing policies and procedures towards the common platform of UAE Vision 2021 and its Green Growth Strategy.

In the capital, Abu Dhabi Sustainability Group (ADSG) regularly hosts events to highlight economic, social and environmental issues and its implications for sustainability as experienced by the government, businesses and not-for-profit communities. Under the ADSG, approximately 70 stakeholders are engaged in formulating an action plan, which will set targets to achieve green growth in oil and gas, water and electricity, transportation, buildings, waste management, industry and economy and land use and agriculture.

In June, Ajman hosted its first green economy conference, Less Carbon for Sustainable Development, under the patronage of His Highness Shaikh Humaid Bin Rashid Al Nuaimi, Ruler of Ajman and Member of the Supreme Council, with Carbon Dubai, the UAE Ministry of Environment and Water and the United Nations Development Program (UNDP). In July, the UAE Ministry of Foreign Affairs (MoFA) and Masdar signed an agreement to enhance the sustainability features of the country’s embassies the world over.

Dubai’s Sustainable City, currently under construction at the junction of Al Qudra and Shaikh Mohammad Bin Zayed Roads in Dubai, is planned as a 46-hectare green development project. Energy supplied to the 500 townhouses and villas will be 60 per cent solar-powered, while water consumption will be 30 per cent less than the norm.

These and several other efforts are best encapsulated by Dr Sultan Ahmed Al Jaber — CEO and Managing Director, Masdar, UAE Minister of State and the UAE’s Special Envoy for Energy and Climate Change: “There is an intricate balance that we must strike between our rising economies, growing societies and limited resources — a balance crucial to achieving a sustainable future.”

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