Dubai: Tourism performing well

Dubai’s tourism industry continues to perform well in 2022. The total number of international visitors reached 8.10mn over the January-July period, representing a 184% increase from 2021 (2.85mn) but still around 15% below pre-pandemic levels recorded in 2019 (9.58mn). Nevertheless these numbers indicate a substantial increase from the year prior and continued growth is expected as the year progresses.  

India remains the top source market with 975,000 visitors since January whilst Oman, Saudi Arabia, the UK and Russia make up the rest of the top five. Key to the overall figure is the reintroduction of nations that have historically been the source of many tourists but have slowed down considerably since the onset of complications brought about by the pandemic. Visitors from Australia have increased steadily over the past few months, since they re-opened their borders, and the same can be said for the likes of Nigeria. The Philippines has also returned to the list for the first time in almost two years. China, normally a huge source of guests, remains the biggest outlier to this as travel restrictions brought about by their zero-Covid strategy continues to hamper Dubai’s tourism sector and will continue to so long as it is in place.

The Emirate has also welcomed a huge influx of travellers from GCC nations compared to the previous year, contributing to 23% of the total volumes, the largest source of visitors by region, with Western Europe following closely behind at 21%. This has primarily been driven by guests from Oman, Saudi Arabia and Kuwait which have all seen tremendous upticks in numbers from 2021 (up 1145%, 372% and 481% respectively), reinforcing Dubai’s continued appeal to travellers from the near region.

International visitors to Dubai (monthly)

Source: Department of Economy and Tourism, Emirates NBD Research

PMI surveys for Dubai have reflected this growth in visitor numbers as the latest reading (August) for the travel and tourism index came in at 58.3 from 56.9 the month prior, the best performing sector of the three surveyed. Similarly, data from STR has shown improvements in the hotel and hospitality sector. Hotel occupancy increased to 61.0% in July from 54.0% in July 2021 whilst RevPAR increased 32.1% y/y to AED 265 (USD 72) all while supply of rooms grew by 8.2%. 

Dubai’s tourism and hospitality sector is likely to benefit greatly from the FIFA world cup in Qatar later this year, as the Emirate’s position as a regional hub will connect travellers from all over the world and act as a base for the length of the tournament as well. However the strength of the dollar may hamper growth in the second half of the year. The greenback is already at its highest level in 20 years and the FED is expected to hike interest rates even higher in response to surging inflation, which is like to strengthen the dollar for the foreseeable future. Given that the dirham is pegged to the dollar, this makes Dubai more expensive especially for those from emerging markets whose currencies have depreciated this year.