Growth in tourism will ease to five per cent in 2009 from 15 per cent this year as a result of the global economic slowdown, an international expert in the sector predicts. The downturn in tourism, which accounts for 22.6 per cent of the UAE economy, will jeopardise ambitious government targets to attract more than 18 million visitors every year by 2015.
"Over the past few months, Europeans, who make up about 40 per cent of the tourists coming to the UAE, have seen a sharp decline in their investments and real estate, and this is one factor that will discourage many of them coming here," said Alex Kyriakidis, the global managing partner of tourism, hospitality and leisure at Deloitte, an international consultant. In the past three years, the country's tourism growth had been hovering within the 15 per cent growth range, said Mr Kyriakidis. "But by the end of 2009, I think we will see it 10 per cent down from this figure or at the very best a flat - or no-growth - rate, because in the past weeks the country has become 30 per cent more expensive as a result of the unfavourable exchange rates with European currencies."
He said bookings for the first quarter of next year still appeared positive for the UAE, but the negative results of the slowdown would start to appear in the second quarter. "But putting matters into a global perspective, I think that the UAE will be in good shape compared to other regions such as Europe and the US, where we are expecting the growth rates to drop as much 20 per cent," he said. The Dubai Department of Tourism and Commerce Marketing has set an ambitious target of attracting 15 million visitors by 2015 as part of its tourism strategy - the lion's share of the national tourism target.
"By the end of 2007, Dubai managed to attract 7.7 million visitors and in order to double that number over the set period, the emirate has to start looking into diversifying from just being a luxury destination," said Mr Kyriakidis. Khalid al Malik, the chief executive of Tatweer, the government-owned company that is behind the development of Dubai's largest tourism attractions, said diversifying the city was one of the company's goals. "Before, Dubai had the perception of being a place for luxury stays, short-term stays, and a singles and couples destination, but now we are working to turn Dubai into a long-stay destination and a family destination."
One of Tatweer's major projects is Dubailand - 45 gigantic mixed-used projects totalling an investment of Dh235 billion (US$63.98bn). Once complete, the company hopes to attract 40,000 visitors a day. Also in Dubailand, another project called Bawadi is under way, which will include one of the world's largest hotels: the Asia Asia. With 6,500 rooms, it will cover more than 55 hectares. "We are committed to completing and delivering these projects because we know that this is the only way we can achieve our 2015 tourism vision," said Mr al Malik.
As it becomes increasingly difficult to finance massive projects - such as those in Dubai - Mr Kyriakidis believes that a third of the projects in the country will be cancelled, a third of them will be delayed and a third will be delivered on time. "I think one of the main reasons that these projects will be delayed or cancelled is because banks and investors still regard these projects as being part of the real estate industry, which is not doing very well now," he said. Asked if any of Tatweer's projects would be affected by the slowdown, Mr al Malik said the Dubai Government was assessing the situation and would announce plans for the projects by the end of this month.
"And there will be no mergers with the company; Tatweer will remain as Tatweer and, as I said before, we are committed to all our projects."
abakr@thenational.ae
