Dubai's hospitality industry predicted to continue growth past 2020

Dubai, UAE. Photo credit: Schmid-Reportagen/Pixabay

The rise in visitors to theme parks, cultural attractions, Expo 2020 and in affordable hotels has put Dubai's hospitality industry on track for continued growth past 2020. 

New tourism incentives, like rising service standards, new attractions along with renovations of operating venues and the introduction of brands, are forecast to attract new tourists and boost average length of stays. Meanwhile, further investment in airports and hotels as well as diversification of source market are driving Dubai's growth and appeal. "As the Expo 2020 installations are repurposed, it is anticipated that the number and scale of these attractions will continue to grow. Significant tourism development such as IMG Worlds of Adventure, Dubai Parks and Resorts and cultural attractions like The Louvre in Abu Dhabi, are expected to steadily attract leisure travelers for the decade beyond 2020," Sidharth Mehta, partner and head of building construction and real estate at KPMG Lower Gulf, said in a statement.

According to Christopher Lund, associate director for MENA at Colliers International, the growth in demand from source markets India and China are key factors in Dubai's tourism industry growth. The rapidly growing middle class of both countries has allowed the number of passport holders to surge, allowing for increased ability for international travel. Dubai's introduction of the new visa procedures for Indian and Chinese nationals allowed tourist numbers from these countries to gain double-digit growth.
 
The emirate welcomed 15.8 million tourists in 2017. Analysts predict the number of tourists will reach 20 million by 2020. This rise has forced the diversification of demographics in the emirate, according to data from KPMG. The number of tourists arriving from China, Russia, Southeast Asia, Latin America and Sub-Saharan Africa has increased since last year. 

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There are no significant theme parks between Singapore and Paris like the projects found in the UAE. "Dubai's initial ventures into theme parks, in addition to upcoming supply from Abu Dhabi, could consolidate the emirate as a major theme park destination," Mehta said. 

The growth in the GCC's tourism industry has also boosted tourist arrivals to and within the region, increasing tourist numbers to Dubai in response. "This suggests that Dubai's hospitality industry may be heading for further success beyond 2020," Mehta said.

The rise of affordable lodging

Lund expects Dubai's affordable hotels sector will remain a major focus for investors through 2020 now that the city is becoming a hot-spot for both mass and niche tourism. A total 20 percent of Dubai's hotel rooms were rated from one to three stars in 2017, compared to Paris' industry, whose one- to three-star hotels accounted for 43 percent of the city's market.
 
Owners have traditionally preferred investing in the luxury hotel sector. However, owners are now turning to lower market hotels as competition rises in the market, entering the sector with less knowledge of the segment, new risks and possibilities.