Investments paid off as tourism thrives in the United Arab Emirates

Tourism has been a key pillar in the UAE’s strategy to reduce its dependency on oil revenue in recent years. Due to investments in architecture and cultural events, tourism now forms 13.5% of the GDP.

The country’s tourism strategy works in partnership with its plan to develop cities, primarily Dubai and Abu Dhabi, as major airline hubs. As the UAE does not have an old history of cultural sights, tourism has been built around luxury living, shopping, exhibitions, sports and major architectural projects such as the Jumeirah Palm – an artificial palm-shaped archipelago.

Major events drive inbound tourism

In 2012 arrivals to the UAE rose to 11 million which confirms that the UAE continues to be a popular tourist destination. Growth in tourism has been fuelled by events such as the Formula 1, the Grand Prix in Abu Dhabi, the Dubai Shopping Festival and the Dubai World Cup – the world’s most expensive horse race. Most people come from Europe, followed by Asia and the Middle East. To boost tourism further the country plans a number of big architectural projects. These include the MohammedBinRashidCity, which consists of 100 hotels, the world’s biggest shopping mall and a Universal Studios theme park, as well as the Jebel Ali complex, which will feature five theme parks and a replica of the Taj Mahal.

Domestic tourism on decline

According to new research from Timetric, domestic tourism fell from 6.7 million domestic trips in 2008 to 5.5 million in 2012, at a CAGR of -4.8%. This is due to a number of reasons. First, the UAE is home to a large expat population and many prefer to travel to their home country when they are on vacation. Secondly, most UAE citizens travel abroad to escape the heat during summer, which is also when schools are closed. Finally travel costs within the UAE are rising, due to high tolls and lack of budget accommodation.

Outbound tourism records marginal growth

Outbound tourism increased at a marginal CAGR of 0.7% from 2008 to 2012. The main reason is the continued economic uncertainty in Europe. As people from the UAE tend to spend more money when traveling abroad, outbound tourism expenditure rose at a CAGR of 2.45%, again making it much higher than inbound tourism expenditure in 2012.