UAE outstrips global tourism trends in H1

The UAE has outperformed depressing global trends in tourism arrivals in the first half of 2021 with the decline in its hotel occupancy rates appearing less severe compared to other markets, according to findings of a study released on Tuesday.

Going forward, as the positive impact of the UAE’s strong vaccine programme starts to take effect, the outlook for the ravel tourism sector has been brightening as the country expects the sector to contribute Dh280.6 billion to its economy by 2028.

In the first half of 2021, while the total passenger traffic at Dubai International Airport stood 76.2 per cent below the same period in 2019, hotel occupancy rates were between 7.4 and 14.4 percentage points lower compared to the corresponding period two years ago, according to CBRE’s UAE Market Review Q2 2021.Dubai for instance, welcomed 3.7 million overnight visitors during the 11-month period from July 2020 to May 2021. With the World Expo UAE opening in October, hotels across the country are gearing up to welcome millions for overseas visitors.

In the first half of 2021, while citywide occupancy rates still remain below 2019 levels, when considering the shortfall in international tourism, declines in the UAE occupancy rates have been less stark, underscoring the relative resilience of the UAE’s hospitality sector. “Over this period, Fujairah was the only location to register an increase in occupancy, with occupancy increasing marginally by 0.4 percentage points.”

In 2020, the global number of average daily flights fell by 41.5 per cent compared to 2019, to an average of 67,223 flights per day.

Since then, the global vaccination drive has underpinned the start of the recovery in the global travel and tourism sector. In the year to date to June 2021, the average daily number of flights have increased to 73,508, although this remains 33.8 per cent below the same period in 2019, said the report.

However, despite this increase in the number of flights operating, international visitation is still someway off its pre-Covid levels, with the latest year-to-date data from UN World Tourism Organisation showing that total international arrivals stand 85.4% below its 2019 levels, CBRE said.

Overall, despite the challenges raised by the pandemic, the UAE has shown a considerable degree of resilience in 2021.

Sustained improvement in the non-oil sector activities and the recent uplift in oil output production cuts, both backed by stronger global growth, means that the UAE is likely to see a growth rate towards the higher end of the range forecast by the International Monetary Fund and the UAE Central Bank.

The IMF and the UAE Central Bank had forecast that the UAE’s GDP is expected to grow in 2021 by 1.6 per cent and 2.4 per cent respectively.

Data from the UAE’s Federal Competitiveness and Statistics Authority shows the scale of the impact the pandemic has had on economic activity. As a result of the restrictions on economic and social activity and a global economic downturn, the UAE’s GDP fell by 6.1 per cent in 2020.

Given the decline in economic activity, there has been a marked decrease in employment levels, with total employment estimated to have fallen by as much as 8.5 per cent according to data from Oxford Economics. “However, given the effectiveness of the lockdown measures enacted by the UAE government, the actual decline may have been less severe. Data from the Ministry of Human Resources and Emiratisation estimates that employment – where employment registered with the ministry in 2019 was estimated to account for almost 73 per cent of total employment – fell by 5.9 per cent,” said the CBRE report.

While the three largest occupational sectors – craft and related trade, elementary occupations, and services and sales – saw the most significant declines in employment, in most parts this is likely to be frictional, rather than a long-term structural loss in employment. More so, technical, professional and managerial occupation employees almost all saw an increase in total employment levels, which due to their relative earnings and purchasing potential compared to the aforementioned occupations will bode well for consumption.

— issacjohn@khaleejtimes.com