UAE domestic spends surge 13%

Dubai - Growth in 2015 hospitality sector spend was driven by UAE 'staycationers' by 10%

Consumer sentiment remained strong in the UAE as domestic spending across the country shot up 13 per cent in 2015 compared to 2014, while overall card spends in the UAE grew by nine per cent during the same period, according to Network International, a leading payment solutions provider in the Mena region.
The report, based on credit and debit card transactions in the UAE, found that spending by UAE-issued cards has remained by far the largest in value over the past two years and has remained steady between Dh9 billion and Dh10 billion per month.
"The UAE economy, driven by diversification into non-oil revenues, has borne resilience to current market dynamics, as indicated by our analysis of card-spending data over the past year. Our analysis indicates some strong trends that can be leveraged by retailers and merchants in the UAE to bolster marketing strategies," said David Mountain, chief commercial officer, Network International.
The 2015 consumer spending report indicates that domestic spenders were the highest spending group in the UAE last year. The United States, Saudi Arabia, Qatar and Kuwait also made it to the top spenders list. GCC spending increased by 15 per cent last year while North American spends showed a 12 per cent growth. Among the top seven tourist spenders, Qatar displaced Russia to take the fourth spot overall in the UAE.
"The appreciation of the dollar (and thus the dirham) had a negative effect on tourist spends from non-pegged currencies, with repercussions especially dominant in Asian and European spending. US spending however, being independent of the exchange rate fluctuations grew by 13 per cent. However, the average per purchase spend of US cardholders decreased in all sectors (except travel and duty free) as major hospitality and retail chains devised attractive deals/discounts to lure American customers to visit and spend in Dubai," report pointed out. The steep decline in oil prices along with the devaluation of the Russian rouble saw Russian spends drop to nearly half as much when compared to 2014. Chinese card spends also declined by 13 per cent in 2015 as compared to 2014.The one exception here is the UK where spends grew by nine per cent in 2015 versus 2014 even though the British pound (depreciated against the dirham in 2015. 
UAE residents showed the highest increase in spending in the food and beverage and hotel sectors. They spent 23 per cent more in restaurants in 2015. Other GCC countries also contributed heavily to this industry with Qataris leading the way with a 50 per cent increase in F&B spends, followed by an equally impressive 48 per cent increase in spends by cards issued in Saudi Arabia. Lebanese cardholders remained the highest per purchase spender from 2014 in this category.
Growth in 2015 spends in the hospitality sector was driven by UAE 'staycationers' (up 10 per cent) as well as visitors from Saudi Arabia (up 12 per cent) and the UK (up 14 per cent) which offset the flat spending by US cardholders and a strong decline in European visitors including Germans (seven per cent), French (12 per cent), Austrians (36 per cent), and Russian tourists (35 per cent).
Overall, hotels in the UAE witnessed a four per cent growth in spends in 2015 as against 2014, however the per purchase spend declined this year, indicating a lower Revenue per Available Room (RevPAR) of hotels in the UAE.
While the clothing sector did not experience any growth in volumes in 2015, domestic spends increased by four percent, offsetting a nine per cent decline in international spends. The major growth in spends in the UAE's clothing sector came from cardholders in Saudi Arabia (19 per cent), Qatar (15 per cent) and Egypt (30 per cent), while spends from Nigeria almost quadrupled in 2015 compared to 2014.
Supermarkets spends are unsurprisingly dependent on domestic consumption, and grew nine per cent in 2015 as compared to 2014. However, there was a four per cent decline in per purchase spend of the sector from Dh 212 to Dh203.
- issacjohn@khaleejtimes.com