Dubai Tourism Destination

Jean-Claude Baumgarten, President of the World Travel & Tourism Council (WTTC), said “tourist arrivals in the Middle East surged by 12.9 per cent in 2007 as against the global average growth of six per cent.” How do you assess the tourism industry development in the UAE? What are the competitive advantages of the region?

If we look at the way tourism has developed in the region in the last two decades; let’s take the smaller region – the Gulf states, Dubai took the lead around 20 years ago by not only marketing the product but also by enhancing the product itself and by putting lots of money into the infrastructure and the whole region followed. So, in terms of the substantial growth of tourism in Dubai’s economy, if we take it against the global percentage, you’ll see that this is a tourist hot spot at the moment. Going back to the reason for this development, there was strong determination by the government to promote it. Many people think that because this is a new destination, it will lack resources. However, we focused on the product; we chose the right market for Dubai and the whole region.

How does Dubai in particular compare to these numbers? What is its growth?

Dubai’s numbers are quite high but we use another indicator: the contribution of tourism in our economy is around 30% including both direct and indirect factors. If you take the global contribution of tourism to the economy it’s 10%. In addition, Dubai has one of the highest occupancy rates in the world now. These are strong indicators, which encourage Dubai and people abroad to invest in this sector.

The UAE finds itself in a politically complex region. Iraq’s unsettled situation, Iran’s nuclear program and the United States’ presidential election are factors that can threaten the tourism industry. What are your thoughts on the geopolitical situation?

We’ve been through similar cases and incidents in the past. Through all the crises, the tourism industry did very well. For example, after the events in the United States in 2001, 2002 was a bad year for the global tourism industry but, on the contrary, in Dubai we had a 31% increase in that year; the highest in the world. We have recovery plans and crisis management to deal with such issues and people trust Dubai internationally.

Don’t you think that Dubai might be becoming too dependent on tourism?

That’s a good question, but we have planned this and that’s because we were based on oil but now we are developing. The property, finance and banking sectors all take a big share of the economy so that creates an equal balance. However, that doesn’t mean we will slow down the growth of the tourism sector, we will continue to raise the levels.

You declared that “The Dubai tourism department’s strategic plan envisages an increase in the room capacity of hotels and hotel apartments from 47,000 units now to 127, units by 2016, representing a growth of a staggering 171%.” How do you see the evolution of the hotel industry and supply and demand?

To simplify it: at the moment, with 47,000 units, we have an almost full occupancy rate; we had the highest occupancy rates in the world in 2007 and in the first quarter of 2008. We also had the best revenue on availability. Our target is to reach 127,000 units by 2016; we currently have 7 million rooms in Dubai and there are complaints that there is a shortage. So, it’s a simple calculation: we need to double the occupancy rate and we have to have more availability.

The structure of the hotel industry resembles an inverted pyramid with a lot of five star hotels at the top. How do you deal with this situation?

From day 1, it was decided that although we cater for many different levels, we definitely target a market for good reasons for the country. We decide whether to go for five star or four star based on commercial factors and studies carried out by investors… And it works! At the moment, about 40% of our rooms are five star and it’s growing but that doesn’t mean that we are not going to develop our four star hotels and others, it just means we are focusing on five star rooms at the moment.

The UAE is the dominant player in the region’s tourism development with an 85 percent share of the total value of announced projects, amounting to AED 858 billion. Of this amount, tourism projects in Dubai totalled over AED 450 billion, which is about 50 percent of the value of UAE projects. How do you assess DTCM’s role in attracting investment in Dubai? What are your strategies?

It’s simple, investors look for numbers: when they see numbers like the ones I mentioned to you; for example, the highest room occupancy rates, then they invest in Dubai. They come to Dubai because of the results, demand and the gain. Doing business is simple, entry into the country and the legal system is very clear and transparent so where is the risk? You can’t have a better investment environment than Dubai.

So you’re saying that the environment is perfect but your role as the DTCM to attract more is to make it more fluid?

We are marketing the product for tourism, and on the side we do the commerce market as well. So, our job is to classify the tourism market, to enhance the product of tourism, market it and regulate it.

With Dubai predicted to have 50 million tourisms by 2016 and strong immigration, there will be a huge strain on the infrastructure and its capacity. How are you going to tackle these challenges?

That’s true but there is also a very quick response by the government; they are spending over $20 billion on transportation: road infrastructure, the metro, and so on. You don’t see things like this in other countries and these things it takes time. This has developed through the commitment of the government of Dubai to enhance the infrastructure on a constant basis. Another example is the airport. So, as you can see, there is a quick response and the solution is found.

Could Dubai become the victim of its own success? How do you see Dubai’s capability to achieve sustainable tourist development?

We don’t leave it to luck, we plan everything. We enhance the tourism product and increase the number of attractions in Dubai. When we market Dubai we don’t market it in just any country; we have criteria for each market depending on the size of the market, the economy of the market, how it is connected to Dubai and we use different marketing campaigns for different markets, for example we don’t use the same campaigns in Japan as we do in the United States. So, we have specific criteria for where and how we market Dubai, and that is a key issue for us.

Which geographical areas do you focus on when marketing Dubai?

There are important markets that we monitor and check all the time. If we take, as a region, Europe and a country in it, for example the UK; the other European countries like Germany, France or Italy were doing very well in comparison. The same goes for the United States: the United States was a slow market before, but now that we have direct flights we concentrated on that market to promote Dubai and now numbers are doubling. The situation is the same in Australia. But all these markets would do better if we had higher air capacity and higher seat availability. That’s one side, but then we also have new markets that we are developing, like China or Latin America and other smaller markets, and we are going to give them more and more attention.

Abu Dhabi has developed a particular cultural identity and Sharjah positions itself as one of the cultural leaders in the region. What are your thoughts on Dubai’s cultural identity?

One of the attractions of tourism will include promoting the culture, arts, archaeology and museums of Dubai. Also, a new authority was announced yesterday. It will be specialised in all of the elements I mentioned to enhance them, make more use of them, and when it is established it will be a strong element of tourism. There are many projects: for example, museums, certain buildings, and there are certain areas for developing them. An example of this is the Creek Project where the two banks of the Creek will be filled with heritage and cultural projects.

So you are using the culture of Dubai in the 40’s to create really strong heritage?

There have been many very important discoveries of archaeological sites that will be announced this year. Some of these sites, deep in the desert, go back three to four thousand years. There are some beautiful pieces.

What exactly is brand Dubai? What would you like it to be associated with?

It is a dream destination and something you have to experience. If you compare it with other destinations, Dubai is the only destination for many markets. It’s all about service and safety and class. Regarding Brand Dubai, it is something that Dubai is working on as a whole, which will be announced soon. There are two projects: one is for tourism but the second is for Dubai as a whole.

What is your greatest accomplishment so far in your career? How are you going to do something for Dubai itself? What is your personal ambition?

I started in the first week of this department, when the Board created it 20 years ago. We achieved the maximum: you can’t have better results than what we’re having at the moment. The biggest challenge is our new goals, which change constantly. In conclusion, we have achieved a lot but there’s still a lot to be done!