Infrastructure needs to be developed further to lure tourists

While the recent bombing of Sharm Al Shaikh will be an uppercut to the Egyptian economy, there is no doubt also that holidaymakers are showing increasing resilience in the face of terrorist attacks.

As a result any headache and fuzziness in the Egyptian economy is expected to be distinctly short-lived.

In this regard, Egypt is helped by the sheet strength of the tourist industry. There were 800 million tourists in the world last year and growth has remained strong.

Moreover, what constitutes favoured destination status seems to be changing in this region's favour. The Middle East has produced a 17 per cent year on year growth in numbers in 2004, the highest growth figure of any region in the world.

That's not to say hoteliers can be blasé. Maintaining supply has proved this summer to be about managing demand.

I recently wrote that some of the hotels in Dubai might have had a soft summer due to higher and inconsistent pricing. Further research has shown that, with the commencement of the summer, hotels have adjusted pricing downwards while increasing their marketing activities. They have quickly brought back occupancies to 80 per cent plus.

However, the true winners have been hotels that last year held pricing level in the face of strong demand, and met their rate commitments to tour operators and corporate clients.

Relationship

These hotels are now hitting close to 97 per cent occupancy.

The lesson from this is simply to develop relationships with your regular clients, not to take advantage of opportunities with short-term transactions. Hold your committed rates even if the market pressures allow higher rates. In the long run this will always pay off.

Dubai last year surpassed Egypt's tourist numbers. Egypt captured 6.4 million visitors in 2003, while Dubai secured 6.4 million hotel guests, and an additional one million visitors who stayed with friends and relatives.

Despite frenetic growth in the hospitality sector, demand is growing faster than it can be accommodated.

Global market

The weather has boosted traffic with a late summer, and until two weeks ago a pretty mild one too. The issue now is when infrastructure can catch up with the growth.

More hotels are needed by the dozen; more flights too. Analysts estimate that in another 4 to 5 years around one billion people will be going on holiday annually one in six people will be boarding a plane and visiting another country. The world truly is getting smaller.

Today, Dubai's share of the total world market is just under one per cent. Growing this share is the challenge.

The marketing thus far of the emirate has been impressive, and with more of the same there is no doubt Dubai, and its neighbouring emirates, cannot continue to grow.

However, so far Dubai has benefited from being a curiosity.

Many of Dubai's holidaymakers are visiting for the first time. To make them repeat customers their experience has to be all it can be and then some.

Dubai is growing at breakneck speed and to maintain quality, while managing the growth, is the emirate's real test. So far, so good.

It is difficult to ascertain where in the curve is the tourism market but my guess is that we are in a new stage where infrastructure is going to be tested more than ever hotels, airlines and supporting industries will all be stretched.

How soon Dubai can build more inventories to satisfy demand and improve the content for the tourist, the sooner Dubai can consider itself a tested and mature market.

The writer is the UAE-based president of Sher Consulting.