Which UAE stocks have most to gain from tourism sector’s sustained growth?
Whether it’s Salik, Air Arabia or ADNH, all signs point to more growth
Dubai's reign as the world's top tourist destination shows no signs of slowing down.
For a third year in a row, Tripadvisor crowned it with the top spot, solidifying its place as a travel oasis with something for everyone: luxury hotels to budget bites, and thrill-seeking attractions to blissful cultural sites.
This diverse charm, coupled with seamless visa processes, strong public-private partnerships, and a vibrant culinary scene has transformed tourism into a key driver of Dubai's economic engine.
The numbers paint a dazzling picture: Dubai witnessed a 20 per cent surge in international visitors to 15.37 million in the 11 months ending 2023. Hotel revenues are bubbling 27 per cent hotter and occupancy at a tasty 75 per cent.
Even a dip in room rates can't cool the heat, as UAE tourism surpasses pre-pandemic levels. Even the ‘bleisure’ trend of blending business with leisure is finding its sweet spot in Dubai, where average room rates surpass the regional average and occupancy rates at 76 per cent.
Dubai's future ambitions are equally sky-high. The emirate aims to attract a staggering 40 million visitors by 2030, backed by a hotel room expansion plan that will double capacity as the city prepares for major events. World-class airlines like Emirates, Etihad (with new routes to the US, India and Africa), and budget carrier Wizz Air Abu Dhabi (2024 target: 30 per cent passenger growth) fuel this boom.
And don’t underestimate Ras Al Khaimah. The city emerges as a rising star, experiencing its best tourism year ever in 2023 with an 8 per cent visitor increase.
Beyond the statistics, what does this mean for investors? Stocks in industries tied to visitor flow are poised for an exciting ascent. Hoteliers, restaurateurs, airlines, entertainment companies and retailers stand to benefit from the influx of tourists seeking unforgettable experiences.
So, keep a close eye on some of these key tourism-linked stocks. With the UAE's skyrocketing visitor numbers and ambitious growth plans, the ride promises to be exciting.
Americana Restaurants
This quick service restaurant giant with brands like KFC and Pizza Hut is primed to cash in on the appetites of residents – and tourists. Americana’s recent 7 per cent revenue growth and 15.8 per cent profit surge serve as testament to an ability to capitalize. Besides, their healthy debt-to-equity ratio adds stability.
Salik
As tourist laden vehicles crisscross Dubai, Salik's toll system rakes in profits. Their 12 per cent revenue rise in Q3-023 speaks volumes about their connection to growth from tourism activity. Their impressive 2023 return and juicy 4 per cent dividend yield further sweeten the deal.
Air Arabia
Air Arabia's surging profits and ambitious expansion plans paint a compelling picture. Their low-cost model, financial stability, and focus on untapped markets like Africa offer potential. Of course, geopolitical and fuel price risks linger, but with a surge of 50 per cent in net profit in the first 9 months of 2023) and a lean, cash-rich business, Air Arabia could soon soar even higher.
Air Arabia's skyrocketing 40 per cent return and targeted 15-20 per cent passenger growth are major positives. The 5 per cent dividend yield makes it further lucrative.
Abu Dhabi National Hotels
Poised to capture millions of visitors to UAE as guests, ADNH benefits from a range of hotels like the Hilton, Sheraton, and Le Meridien, catering to diverse budgets and preferences, thus reducing overall risk. ADNH's Q3-2023 results showed a 74% YoY jump in net profits, indicating potential for healthy returns and dividend payout.
Abu Dhabi Aviation
A haven for private jets and charters catering to wealthy clientele, Abu Dhabi Aviation offers stability even during economic downturns. Their partnership with Etihad Airways for ground handling services adds another layer of security.
Overall, Abu Dhabi Aviation offers a potential play on the growing Middle Eastern luxury travel market, but requires careful risk assessment and diversification.
Dubai Refreshments
As summer temperatures begin to rise, so does the demand for Dubai Refreshments' line up of beverages. Their extensive distribution network and strong brand partnerships ensure market reach and potential revenue growth.
While investing in established companies can be a great way to tap into the Dubai tourism boom, starting your own business that can tie in to the sector can also be considered…