Mega projects and 2022-23 growth further boost Dubai tourism sector

Inayat-ur-Rahman, Business Editor

Dubai’s tourism industry has begun the year 2023 on a bright note with vital growth indicators closing in on pre-pandemic levels, giving the emirate a head start in the race to achieve its strategic long-term targets over the next decade.

With public and private sector players rolling out a series of mega projects and major global hospitality brands making a beeline to invest in the emirate, tourism is set to be a big contributor to the Dubai Economic Agenda D33’s goal of doubling the city’s economy in the next 10 years. With Dubai expanding its status as a global gateway for trade and investment and its role as a bridge between markets and cultures, tourism is expected to grow in parallel. In 2022, the emirate’s tourism sector contributed $29.4 billion to its economy, according to the World Travel and Tourism Council (WTTC).

Dubai’s ambitious plans for tourism growth also support a national strategy launched in November last year by His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, to attract Dhs100 billion in additional tourism investments and receive 40 million hotel guests in 2031. The plan, which includes 25 initiatives and policies, has whetted fresh global investor appetite for a slice of the rapidly-growing tourism pie.

Helal Saeed Almarri, Director General of Dubai’s Department of Economy and Tourism, said: “Dubai’s ability to simultaneously leverage new opportunities and industry trends whilst navigating the impact of global challenges has made it one of the world’s most attractive and fastest-growing tourism and economic cities. With a unique and diverse tourism proposition, diversified market strategy, world-leading urban infrastructure, inclusive and cohesive public-private partnership ecosystem and high safety and security, Dubai continues to be the preferred choice for global travellers.

“Dubai’s tourism growth surge mirrors its development into a leading hub for trade, commerce, investment, talent and entrepreneurship. With the D33 Economic Agenda charting a visionary new growth path for development, Dubai is set to further consolidate its status as one of the world’s top international business and tourism destinations.”

The start of 2023 saw Dubai’s global tourism profile being boosted with a flurry of global accolades. The city was ranked as the world’s most popular destination for holidaymakers in Tripadvisor Travellers’ Choice Awards 2023 for a second year in a row. Dubai also took the second spot behind Paris in a Euromonitor report on the world’s top 100 city destinations. For the ninth year in a row, Dubai International Airport was named the world’s busiest international passenger hub in 2022.

The tourism industry’s Q1 2023 performance metrics augur well for high-octane growth this year. Dubai welcomed 4.67 million international overnight visitors in the first quarter of 2023, compared to 3.97 million tourists during the same period in 2022, a 17% increase. More tellingly, the first quarter figures were merely 2% less than the pre-pandemic inflow of 4.75 million international overnight visitors in the first quarter of 2019, making the city a frontrunner in the global tourism industry’s rebound. Emirates NBD said in a recent report that the strong start to the year is a promising sign that Dubai could exceed the record of 16.7 million visitors it set in 2019. Dubai Airports forecasts the total number of passengers passing through the city in 2023 to reach 78 million.

In the first quarter of the year, the Dubai hotel sector’s performance surpassed pre-pandemic levels across all key measures. Average occupancy for the sector in the January-March period stood at an impressive 83 %, making it one of the highest in the world, and almost on par with the 84 % occupancy recorded in Q1 2019. This achievement is particularly notable given a 26 % increase in room capacity since then. Collectively, Dubai hotels provided 10.98 million Occupied Room Nights, a 27% rise from Q1 2019 and registered an Average Daily Rate (ADR) of AED607, a 22 % growth from Q1 2019. Revenue per available room (RevPAR) in Q1 2023 surged 21 % from the first three months of 2019 to reach AED504 while the average guest stay increased to 4 nights from 3.5 in the same period in 2019. In Q1 2023, visitor spend on accommodation also increased 22 % from Q1 2019.

The meetings, incentives, conferences and exhibitions (MICE) sector emerged a prominent driver of tourism growth. Dubai registered its highest hotel occupancy rate in 15 years at the end of Expo 2020 last year, according to the latest KPMG Dubai Hospitality report. Major global events to be hosted by the emirate in 2023, including the COP28 climate summit, the Dubai Airshow and a host of international business and sporting events, will put the global spotlight on Dubai not only as a prominent venue for global events but also as a magnet for tourists.

Dubai has introduced a new strategic plan for exponential tourism growth powered by a massive expansion of its hospitality and leisure infrastructure. From island destinations to unique waterfront communities, Dubai is implementing new game-changing megaprojects. Consistent with Dubai’s ethos of private-public sector cooperation, the emirate’s tourism mega projects are fostering synergistic partnerships that are creating new economic value.