United Arab Emirates Tourism Report Q1 2010

After strong growth in foreign visitor arrivals to the UAE in 2008, there was a mixed picture in H109. Arrivals were up slightly year-on-year (y-o-y) in Dubai but down sharply in Sharjah. In Abu Dhabi, during the first seven months of 2009, the number of hotel guest arrivals slipped by just 1% y-o-y. While figures from the hospitality sector on hotel occupancy levels in Abu Dhabi and Dubai during the first 10 months of 2009 suggest a very poor outturn in the tourism sector for the year as a whole. (We have also noticed that some recent data releases have been somewhat opaque). To counter the downturn and boost tourism in 2010 all the emirates are making considerable efforts with promotional campaigns.

Hospitality
The hospitality sector in the UAE experienced sharp falls in occupancy rates in 2009, although they remain relatively high compared with the rest of the region. In Dubai, figures for January-October 2009 show a significant fall of over 13% y-o-y in hotel occupancy rates to an average of 67.9%. In Abu Dhabi, over the same period, hotel occupancy rates declined by 9% y-o-y to just under 75%. In Sharjah, hotel occupancy rates during Q309 stood at 75%, up slightly compared with Q308, following occupancy rates of 64% in H109 – down 15% y-o-y.

Forecast Scenario
In response to poor hospitality data, we revised down our forecast for tourist arrivals to the UAE in 2009 to -5% y-o-y, down from negative growth of 2% y-o-y previously. The poor outlook for the sector in 2009 is based on the impact of severe recession in the US and key European economies – North America and Europe together accounted for an estimated 45% of total arrivals to the UAE in 2008 – and a significant slowdown in growth in the Middle East. Recovery in arrivals growth is anticipated in 2010 and will pick up from 2011, with robust growth expected over the forecast period through to 2014. The spread of the H1N1 virus (swine flu) has also deterred travel in the region, although at the beginning of December 2009 the UAE had reported a relatively low 79 cases and six deaths from the virus.

Emirates
The latest financial results for the first half of the financial year, ending September 30 2009, for the Dubai-based Emirates airline show it achieved a net profit of AED752mn (US$205mn), a substantial increase compared with AED284mn in the same period a year earlier. Total revenue declined by 13.5% yo- y to AED19.8bn (US$5.4bn), largely reflecting lower passenger and cargo yields; while total expenditure was down by 15.8% y-o-y to AED19bn (US$5.2bn), partly due to lower jet fuel prices.