The unseen photo was taken during their visit to India to promote their 2017 action movie 'xXx: Return of Xander Cage'
Also, multiple new hotels and serviced apartments joined Dubai's tourism landscape. New beachfront developments such as the recently opened La Mer by Meeras further enriched the offering for tourists. In general, one might think that adding supply to Dubai's tourism offering might certainly be advantageous for the sector but on the other hand, one has to consider the consumer demand and appetite as well. Throughout 2017, the tourism industry faced challenges in reaching sufficient demand levels especially over the summer months.
Hotel operators faced a long summer with decreasing demand for hotel rooms and serviced apartments. This resulted in decreasing occupancy rates over summer as well as lower room rates. Recent figures published by Dubai's Department of Tourism and Commerce Marketing indicate the same trend in year to date (YTD) figures till September 2017 - average daily rates (ADR) decreased to Dh472 while revenue per available room also decreased to Dh360.
Having the existing and future planned additional supply of tourism offerings (hotels, restaurants, theme parks, retail assets) in mind, Dubai needs to pay attention to manage and monitor supply and demand effectively. An oversupply of hotel rooms and also further real estate stock as residential apartments and also office space would put the market at risk, with falling prices for renting, buying and staying in hotels.
An important trend is the increasing demand for good value-for-money hospitality offerings in the mid-market sector. In 2016 and 2017 and over the next three to four years, both hotel developers and operators announced the opening of new mid-market hotels in the three to four-star segment. Creating a bigger supply of good value-for-money hotels apart from the existing five-star premium market also enhances Dubai's aim to extend the average length of stay per hotel guest from the current 3.5 nights per visit.
Changing tourist profile
In general, one can argue that the profile of tourists visiting Dubai is increasingly changing. Compared to the mid 2000s when non-GCC tourists were mainly affluent tourists from Europe or Russia, today's tourist profiles and ultimately spend patterns increasingly navigate to the mid-market tourism segment. This overall sentiment of Dubai's future visitors becoming increasingly price-sensitive can be seen in recent statistics.
Dubai's fastest growing source market for tourists has been Asia with 22 per cent growth over the last three years compared to overall tourist growth of seven per cent. It is expected that Dubai's future key tourism growth markets will be across Asia - in particular welcoming visitors from the Indian subcontinent as well as mainland China. A fair share of these travellers will be first-time travellers to Dubai keen to explore landmarks such as the Burj Khalifa, The Dubai Mall or Burj Al Arab.
So, one could argue that the actual volume of tourists visiting Dubai will certainly increase in terms of tourist numbers passing through the city's immigration gates. However, it remains to be seen how tourist spend patterns will evolve over time with regards to the growing segment of first-time travellers from South and East Asia.
Finally, Dubai's tourism sector will further play a pivotal role for its economy and business environment. But when targeting those anticipated 20 million tourists in 2020 compared to around 16 million in 2017, one has to note that tourist volume will grow at a faster level than tourist value - in simple words - Dubai's tourist numbers will go up but value (the actual spend per tourist) will grow at a slower rate.
This change in travel pattern is something that players in the tourism sector need to be aware of. The product and service portfolio of Dubai's tourism sector should be readjusted to offerings and price models that also attract more price-sensitive customers. It remains to be seen if players in Dubai's tourism sector will eventually lower prices to attract more price-sensitive customers.
The writer is the head of corporate development at GRMC Advisory Services. Views expressed are his own and do not reflect the newspaper's policies.
The unseen photo was taken during their visit to India to promote their 2017 action movie 'xXx: Return of Xander Cage'
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