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03 December 2023

UAE leads Mena in tourism development

By Nitin Nambiar


The UAE leads the Middle East and North Africa (Mena) region in transport infrastructure development even as the country’s diversification strategy has meant that the travel and tourism industry now comprises 3.5 per cent of overall gross domestic product, according to data released yesterday.

Tourism prospects for the UAE remain buoyant this year despite a global restraint on consumer spending following last year’s credit crunch and a weakening US dollar, Jean-Claude Baumgarten,

President of the London-based World Travel and Tourism Council (WTTC) told Emirates Business on the sidelines of the ongoing Tourism Development and Investment Market 2008 in Dubai.

“The UAE’s successful diversification strategy has meant that the country has seen a shift away from oil income and a healthy development of all service sectors including travel and tourism. The buoyant economic growth in the region means the travel and tourism industry comprises 3.5 per cent of the UAE’s overall GDP,” said Baumgarten.

The UAE also witnessed the largest government expenditure in the Gulf region on tourism last year, according to Baumgarten. “The UAE is the regional leader in transport infrastructure development and among the top countries in the world in terms of infrastructure ranking,” Baumgarten said.

The UAE ranks seventh in the world in air transport infrastructure, 12th in the world in terms of roads development and connectivity and ninth globally in terms of port infrastructure, according to WTTC research.

The UAE is followed by Qatar, which ranks 35th in the world in terms of air transport infrastructure, Kuwait which ranks 27th in the world in terms of road infrastructure and Bahrain which ranks 26th globally in terms of port development.

“Expectations in 2007 surpassed the results from 2006 in all areas of tourism activities but UAE has experienced major increase in government expenditure, capital investment and visitor exports,” he said. “Forecasts for the next years will be more stable, I think. The Mena region is well above the world average in terms of the travel and tourism industry industry’s contribution to the overall GDP of the country,” Baumgartner said.

As a percentage of GDP, the travel and tourism industry in the Mena region averages around 13 per cent as compared to approximately 10 per cent on average for the rest of the world, according to WTTC statistics.

“Last year, Qatar witnessed almost a 20 per cent increase in the business travel segment, compared to its own figures in the same segment for 2006, while Oman’s move to increase government expenditure on travel and tourism by almost 15 per cent means the country’s [travel and tourism] industry is likely to see stable and consistent growth over the next decade,” Baumgartner said.

Middle East forecast

The 2008 forecast for the industry’s annual growth rate in the Middle East remained constant from last year’s forecast at five per cent even as the forecast for growth in North America, Europe and Africa took a dip from last year’s forecast on the back of restrained consumer spending.

Baumgartner said that while deteriorating economic conditions, particularly in the housing and credit markets across the globe, increased concerns about prospects for the tourism industry this year, Dubai’s travel industry was more or less insulated from its impact due to the excellent infrastructure and myriad choices for different budget segments.

“The US dollar’s weakness is curtailing the travel plans of residents of dollar-bloc countries but it is boosting their inbound tourism,” he said.

On the rising oil prices impacting the industry’s growth globally, Baumgartner said oil prices will see a downward trend in the first half of this year averaging around the $80-mark.

“Higher energy prices are a two-pronged challenge – they squeeze household budgets and raise the cost of a key input for the industry,” he said.