UAE’s hospitality and travel sectors primed for bounce back

The UAE’s hospitality, travel, and tourism sectors are showing healthy signs of recovery, with businesses increasingly focused on meeting new customer expectations in order to drive growth.

Peter Gerstle, head of Travel Products at Collinson, noted that the Covid-19 pandemic has highlighted the value of reacting to a dramatic change in a short time. As a result, businesses have had to pivot and look into temporary alternatives, he said. “For customers, a move away from materialism has become even more pronounced: experiences, not things. We have seen this trend with travellers from the UAE and Saudi Arabia.”

Collinson’s research found that travellers would be willing to pay for additional services that improve their airport experience and wellbeing: 37 per cent of travellers in KSA would pay for airport lounge access, and 30 per cent of travellers in the UAE would be willing to pay for a quiet place to sit and relax.

“This bodes well for the travel and tourism sector, especially as the necessity of some business travel is coming under scrutiny, which will reduce a significant revenue source,” Gerstle said.

Loyalty, he added, is going to be “central” to recovery efforts. “Loyalty has already played a vital role during the pandemic, namely securing the viability of many companies, particularly in the airline sector. Customer expectations in terms of personalisation, service quality, and digital footprint have grown steeply in recent years. Not many loyalty programs in the travel space have caught up yet, and there is significant scope to improve program delivery to match what customers expect.”

New trends set the pace

Diamond Fares, founder and MD of Onpoint, said that, as one of the key countries in the Gulf region, the UAE plays a significant role in the hospitality and entertainment industries.

“The hospitality sector has witnessed an upward spiral in the use of technology not only by hotels, restaurants, transporters, but by guests throughout their journey. Smart and sustainable hotels, robot staff, VR and AR, and unique brand experiences are all big trends right now,” she said.

However, not all trends have to be new as some lead to reshaping the industry and becoming an integral part of the sector. “Digital marketing, for example, has been a crucial tool to reach travellers for quite some time, and it continues to grow exponentially. Since the launch of facebook and other social media platforms, the ability to influence the travel, and hospitality sector has surged - and will continue to do so. It is extremely incentivizing to push media to global audiences since there is so much that can be done,” she explained.

Gerstle also highlighted the rise of “doorstep tourism” among travellers. “For obvious reasons, people have discovered the variety, beauty, and accessibility of tourism closer to home in what I call as ‘doorstep tourism’; this also plays into the hands of sustainability, which is becoming a real consideration when deciding where to spend a holiday. Looking at tourism marketing, crowd-free experiences, space, as well as rigorous health protocols have become prominent messages.”

The rise in more premium services during travel, such as premium cabin flight bookings and more spacious hotels or isolated alternative accommodations at the destination, are also benefitting from this trend, he added. “The pandemic has also accelerated ‘no-touch’ processing, i.e. the move to a far more digital customer experience. We see that in restaurants with online menus, in hotels with keyless rooms, and through the airport with fully digitised passenger processing from curb to plane.”

Hiring activity surges again

Diamond Fares, founder and MD of Onpoint, looked back on the early days of the pandemic and noted that most companies lacked any kind of emergency plan to withstand the challenges created by the pandemic and the restrictions, which were implemented to contain the spread of the virus. Only those companies which were able to adapt to these changes survived, she said.

“The most important lesson, I think, is that companies have understood that they must recommit to resiliency if they want to thrive in such changing times.” She said. “Hiring activities have bounded back due to businesses resuming physical activities and lifting of restrictions, and many which have laid off their employees are hiring again. The employment sector has witnessed a major turnaround with businesses reviving and requiring more employees to meet their daily requirements. Meanwhile, many jobs now have work from home options, increasing the percentage of people that work from home such as mothers and even retired employees.”

The UAE has long prioritised the attraction and retention of talent as it is a proven fact that companies with a skilled workforce are more likely to attract FDI and develop stronger multilateral relationships with international partners, resulting in economic growth and stability, she added. “The latest trends in the talent acquisition industry indicate that companies are going to lay more emphasis on attracting skilled employees by offering better salary packages and other benefits.”

A more ‘experience-led’ marketing approach

Looking ahead, Gerstle, says that it is not yet clear where the “new equilibrium” will be in travel. What is certain is that the business travel market will never be the same as before, he said. Combining business and personal travel will become more accepted, so the boundaries between business and leisure travel – also known as ‘bleisure’ – will blur.

“That has a significant impact, especially for airlines and hotels, in managing pricing, capacity, and distribution,” he said. “Leisure travel will pick up some of the slack, but it can be expected that after a sharp upswing to satisfy pent-up desire to travel, demand will fall back to pre-pandemic levels and even below that for a number of years. The global economic and geopolitical outlook will suppress international travel noticeably. However, when people travel, they will want to make the most of it, so, I expect spending to remain relatively stable.”

Destinations that can satisfy the demand for meaningful experiences will become more popular, he added, and this opens up opportunities for new destinations to position themselves accordingly. Destinations will most likely also see more domestic/regional customers; those that are well-connected to rail networks will also benefit disproportionately.

“That said, some old favourites will remain popular as ever: New York, Paris, London, Rome, Tokyo, and Dubai are seeing very strong demand,” Gerstle said. “Regional sun and sand destinations will continue to attract a fair share of the business. Overall, I expect all destination types to take a more experience-led marketing approach, opening up an opportunity for previously less explored areas to make their mark.”

rohma@khaleejtimes.com