Opinion: Recovery on the horizon for the UAE’s hospitality sector

March 16, 2021 | By RetailME Bureau

Words by Shubhojit Mahalanobis, Director of Danube Home

UAE’s tourism & hospitality sector is all set to rise like a phoenix from the ashes of the pandemic in the ongoing year. At present, the hospitality sector is positively motoring along, albeit slowly and cautiously, on the back of robust domestic travel demand, beginning to chart its way towards full-scale recovery. Although the pandemic still remains at large and the short-term economic gains have been fairly modest, the ongoing resumption of held-up construction projects, COVID vaccination drive shifting into top gear, normalization of trade relations with Qatar, establishment of diplomatic relations with Israel, and the UAE getting ready for Expo 2020 this year represent some of the most encouraging signs instilling greater confidence in the long-term outlook and demonstrating the hospitality sector’s creative resilience and uncompromising adherence to health and safety standards to win the trust of tourists. There is great optimism that these events will have a direct and positive impact on leisure and business travel. And it seems that we are in for an enthralling session of economic recovery for the hospitality sector.

A full-fledged recovery, in great part, both in the leisure and business travel segment depends on how quickly a country is able to reestablish and win back the trust of travelers by effectively managing its vaccination campaign and its ability to positively collaborate with the private sector to bring back tourists. The UAE is presently among the top 5 nations in the world in terms of vaccination rollout, and the government has done an exemplary work in getting the citizens vaccinated. Furthermore, the country has proactively engaged its private sector to implement health and safety standards and has introduced visa reforms to attract more tourists.

It is a perfect blend of these measures that the hotel occupancy rates, beginning from December 2020 to February 2021, neared pre-pandemic levels all the while consistently breaching the 50% mark. The boom in staycations has been a major contributing factor in the resurgence of hotel occupancy rates, touching 71% for Dubai in December 2020 (the highest since February 2020) and oscillating between 50% and 70% in the past three months for all the emirates. Dubai alone witnessed 200,000 visitors flocking to the city for the Christmas and New Year celebrations.

The year 2021 has started on a positive note for the UAE, as the country, according to a PWC report, became “the world’s most searched destination” this year for tourism. In another study conducted by Hilton in the UAE found out that 2021 is projected to be a very busy year for travel as more than 50% of the people who participated in the survey expressed their desire to use up their unutilized vacations from the previous year in 2021.

The UAE’s highly effective and expansive vaccination drive is all set to transform this top global destination into a safer destination for travel, which means that the country is advantageously positioned to benefit from an expected rapid uptick in the global and domestic travel. The recent diplomatic thaw with Israel has already resulted in more than 50,000 Israelis visiting the UAE. According to Central Bureau of Statistics of Israel, more than 9 million international trips were made by Israelis in the year 2019, the UAE could get a pretty good chunk of this pie as soon as the international travel slowly returns to normalcy. Israel and China being on the forefront of COVID recovery curve and the reopening of trade link with Qatar will herald a fresh influx of travelers to the UAE and provide another recovery jab in the arm to the hotel market.

The rise and popularity of holiday homes as the Expo 2020 approaches has been a phenomenon providing much-needed impetus to the hospitality sector. The ability of holiday homes to offer controlled safety and hygiene standards in conjunction with incorporation of technology and more affordable rental costs, the popularity is projected to surge ever further than it already is. Remote check-ins, digital contracts, online payment solutions, and affordable rents are highly attractive options for tourists.

The signs of latent demand for travel are visible. People are ready to go out, put the backpack on, and break the lockdown mold as soon as the travel restrictions are loosened up. They will likely choose a place, in which they trust and feel safe at, which offers the finest fusion of unforgettable experience and leisure opportunities. Therein lies an opportunity for the hospitality sector to shine. With the domestic travel being as strong as it has ever been, the resumption of Heathrow-Dubai travel corridor in March 2021, hoteliers starting to hire more people, and a slew of star-studded international events lined up in the ongoing year including and not limited to the Expo2020, the future of tourism and hospitality sector is all but predicted to make a roaring return to normalcy in the second half of 2021.





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