Led by Dubai, region rides travel boom even as challenges emerge

The new numbers are in, and it does show quite an interesting picture for the tourist market. The year 2004 was a great year, a launchpad for more to happen and indeed it seems that Dubai has got its tourism mix and strategy right.

Indeed, there will be come challenges ahead but with a base of 5.4 million hotel and apartment guests and perhaps another 1.3 million VFR's (visitors to friends and relatives: people who visit but do not stay in a hotel) Dubai' s tourist base is around 6.7 million annual visitors in 2004.

Around 4.7 million of the tourists stayed in hotels and 700,000 odd stayed in serviced apartments indicating a healthy growth in both sectors over the previous numbers. The strong occupancy rate of 81 per cent for the year must be a matter of delight to the industry professionals, and the average length of stay increased from 2.37 days in 2003 to 2.60 days in 2004.

The need for another 40,000 more hotel beds in the next 5 years is going to be a tremendous challenge and something that needs more planning than normal. In the last 10 years hotel beds grew from 22,846 in 1995 to 42,812 beds in 2004, on average 2,000 beds are being added to the hotel industry every year for the past 10 years, with the pace admittedly more like 2,500 beds a year in the past five years. To get another 40,000 beds on stream in five years means 8,000 beds a year coming on stream and this is a tall target, but then Dubai has done a lot of things people said would not happen.

Growing demand

As things stand the total number of rooms committed for development is quite high, though the exact number under development is not clearly stated.

One can see though that a number of major real estate developers have a large number of hotels on the planning anvil and there has been a gradual expansion coming on. I would venture a guess that between the Palm, the Burj Dubai developments and the emerging Dubailand, there will be enough aggregation coming on to fill the demand for 40,000 beds in five years, though the scheduling of so many hotels will have to be speeded up to keep pace with growing tourist demand.

The key will also be when in 2008-9 Dubailand hits its aggregation of theme parks and attractions what the tourist inflow will be at that point and how much will Dubailand serve as an additional attraction point for new inflows to take place.

I am certain of the fact that while the target of 15 million visitors in 2010 seems optimistic at the moment, there are infrastructure elements being set into place, which will assist the process, and it is vital that part of the role of the hotel industry will be crucial to accommodate the hotel guests. Failure to provide adequate rooms in tandem with the needs of the tourist market growth will mean that some of the potential will be driven to other markets. My suggestion is that a government task force be set up to a quick response approach to this, allowing hotel developers a fast track for permissions and development concessions.

The expansion of the tourist offering is very important to the continued growth of the tourist market and to provide a base for a longer stay and or to bring in the repeat visitor syndrome.

I do confess that a fair percentage of the hotel guests are business travellers and they do not normally, strictly speaking, count as tourists However, given that these travellers are related to conventions and corporate events, there is always a tourist element attached to the visit.

The next five years will be crucial to the market and it something that has to be carefully studied, but my guess would be that total tourists, which to me includes hotel guests, serviced apartments and VFR's, would cross 12 million by 2010. If the service aggregation of both hotels and the offerings can take place faster then indeed it is likely that the estimated figure of 12 million tourists will be achieved.

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