Dubai
Dubai: Not recession-proof after all, unemployment shows
Industry reports and few personal accounts reveal massive job cuts in Dubai’s hospitality and tourism industry. Lay-offs in real estate have outnumbered all other job areas in the “City of Gold.” The United Arab Emirates (UAE) can no longer demonstrate staying recession-proof in a global meltdown.
With the unexpected turn of events in the cash-rich Arab Gulf state, one hotel even offered to feed those who have been fired. Two weeks ago, the Arabian Park Hotel’s general manager offered UAE residents recently made redundant to eat for free from December 15, 2008 until January 15, 2009. Published reports claim that only one woman has called in to take the hotel up on its offer. “We’ve not had as high an interest rate as I would have hoped and expected,” Mark Lee, general manager of the three-star hotel, was quoted as saying. Those who got sacked needed to present redundancy notices before a free meal.
eTN has contacted Lee but he has refused to make any public statements about the “free meal” offer, unless the name of his hotel was not mentioned in this article. Afraid to get misconstrued perhaps, Lee said: “We had fantastic coverage of it. But it was not a media marketing campaign for the hotel. It was about trying to help the unemployed.”
Lee’s refusal to talk begs the question: Was he hesitant because he was indeed certain that hundreds (thousands, perhaps) have already been laid off in the oil-rich haven and his offer will only state the obvious and magnify the truth that indeed Dubai is lay-off more?
As it stands, unemployment has risen globally. Over 67,000 factories have been shut down in China to date, while over a million Americans have filed for welfare. Dubai cannot be all immune. Lee’s hotel was being charitable; there’s no reason for him to clam up.
Or is there? Is Dubai, or the UAE, falling apart? Are people being sent home?
Not too long ago, eTN reported that Dubai’s main challenge is in staffing the tourism establishments. The aviation sector alone will require 200,000 additional pilots over the coming two decades, while over 100 airlines are expected to open routes in the UAE. The emirates’ growing need for skilled workers and high-level executives was taking its toll on the continuously expanding airline and hospitality businesses. As the real estate boom in hotels and condos got out of control, more people were needed; until staff accommodation later became an issue with hired overseas labor.
Jumeirah Group executive chairman Gerald Lawless said they have not made anybody redundant. He said: “We’re getting on fine. We continue to expand our business (including our new Macau property) and to get more people into Dubai as we expect a strong Christmas and New Year. We are confident we can cope with the world recession.”
Early this year, Lawless requested for a US$10 billion fund for education in the Arab world from Dubai’s ruler HH Sheikh Mohammed bin Rashid Al Maktoum. The funds were to be used in preparing the region for the huge growth in the hospitality sector and its attendant staffing requirements. The allocation was to serve Jumeirah’s interest to develop vocational institutes and training facilities in the region, at all levels of the industry. How is the project fairing amid the crunch? Asked if the Emirates Academy’s new graduates will have jobs available, Lawless said: “I don’t think it’s anybody’s responsibility to ensure them of any job when they come out of a hotel school or university. No school guarantees anybody a job when you finish. But I am confident companies would like to talk to our students. They don’t work only in Dubai. They are qualified internationally. We see no drop in enrolments. Job prospects are pretty bullish.”
His confidence stems from 13 hotels being built along Jumeirah, with a number committed to open in first quarter of 2010. “We look forward to start recruiting 2nd half of 2009,” he said, adding they are watching the global situation very carefully.
Leading head-hunter for Dubai hotels, Stephen Renard, of Renard Hospitality, said those who are being cut-back are the ones whose projects aren’t going through. Other than that, Dubai can operate without people who aren’t going to be involved in projects that are delayed for a year or two. “If new hotel projects are delayed, they would not need the operating team or project managers. Companies let people go and will re-hire later.”
Emaar Properties, Nakheel, Damac, Tameer and Omniyat have been forced to trim their workforces. Dubailand developer Tatweer is reviewing its recruitment policy in light of the economic situation. “The rank and file and the people who run Dubai aren’t going anywhere,” added Renard.
Few executive searches in Abu Dhabi properties remain active. For instance, the Ferrari hotel will open for the F1 races. “They would have to open the hotel regardless. We were also hiring for a hotel project in Abu Dhabi for the Yaz Island with a ‘city’ for staff. But this was also delayed for six months,” he said, confirming he has active searches ongoing. “The challenge the executives face in the UAE is the cost of living with the index at 18 percent in 2008. Salaries and benefits compensate for the high cost of living; hence, employers need to pay accordingly. People who are committed to go are disappointed when their Dubai departure is delayed, in fact,” said Renard.
Susan Furness, founder of Dubai-based Strategic Solutions, said there’s actual report showing how many people have been asked to reconsider employment. But the official figure is over 3000 and is primarily in real estate. “Some projects have nimble life cycles (taking people on and off), with the more sustainable market here, we won’t see a huge amount of churn. Dubai is looking fairly into moving everybody into 2009,” she said adding, “This is the time for wise leadership. I have seen other markets panic during the SARS, bird flu, other untoward events. Nobody is panicky this time.”
Dubai’s tourism strategy is correct and sound. But the timeline and the numbers should be altered slightly, said Furness who holds events covering hotel investments and hotel real estate. She said: “I haven’t seen any gaps in our calendar formally. In 2009, our events will be timely in addressing the meltdown. In the hotel scene, projects that have been approved and have broken ground are continuing. Other timelines may change.” Furness added she has not seen the hotel sector confirming cancelled projects just yet. However the real estate sector – residential, commercial, retail – indeed has.
Jumeirah Groups’ hotel rates remain competitive in the crunch. “We will continue to promote Dubai and our brand. Confident to open the hotels we planned to open within 18-24 months, we don’t believe they will be held up,” Lawless said. As far as taking Americans looking for work in Dubai, he said: “Send them over.”
Comments
THe president has no say in printing money. THat is ordered by the federal reserve chairman as well as the federal reserve banks.
G. Bush has nothing to do with the crisis in dubai. this problem simply occured because the citzens of dubai became way to greedy with their money. Spnt it on private airlines like "emirates" as well as the million dollar firework show for the grand opening of atlantis. If your not smart with your money and spend it on useless things that truly will not benefit you, oviously it will come back to hont you.
This is the result of the former US administration and in particular Mr. Bush printing so many US dollars that it has dragged everybody down. The Middle East needs to delink their currencies.
hi there
i have applied through an agency for a job in dubai in the hotel bussiness. should i take the oppertunity and come over to dubai or should i decline it? is there still a recession as people are saying or not?
Hello out there. Dubai is hit by economical crisis very badly. :-)
my cousin was working in a bank but due to crisis he lost his job because the bank unit only closed.Now what ? Why does such situations arise? Please provide some job opportunities for freshers too who come to seek job in dubai. Ok and U.A.E. Also.:)
thank you
Global recession, worldwide are experiencing major shake-ups. Dubai is no exception, which was from earlier times already in lots of debts.
The worst hit are Automobile, Construction, Real estate and Hospitality industry,etc., I had come to Dubai selling all my stakes back in my country, and started a small company a year ago, today its on verge of closure with heavy losses. News papers and public domains dont show or talk about the grave situation Dubai is already in. Strangely housing Rentals, School fees, Visa and flight charges or in the increase while people suffer the most. There are perhaps thousands being given pink slips every month. Romours are that mass Exodus will happen by June09. strangely No government help to those require certain concessions or time lines extensions for Co., Licence fee or other kind of help given to the already closing businesses or which are in red, despite the situation. Certain stories that I keep hearing daily about people abandoning their vehicles, credit cards and dumping them at the Airports and flying back home unable to pay their dues once they loose their jobs or business.
I only hope and pray the situation would resume to normalcy soon...while I have plans to close the shutters here and go search for a job back in my country....afterall i got a family to feed back home.
ITS A DEPRESSION IN DUBAI NOT RECESSION BEWARE ALL
Dubai has been a highly overinflated bubble for some time now, and it's time to face the music has arrived.
The Emirates has been living on the edge of collapse for some time, the state of denial can no longer be sustained, reality has set in. Abu Dhabai has been insulated somewhat, but they too will now suffer.
Emirates airlines has billions of dollars worth of aircraft on order, and soon they will be parked in the desert sitting empty with no one to fly on them.
No one can afford to travel, much less stay in overpriced hotels perched on the edge of the desert.
Hard times and many failures will soon follow.
Excess capacity is a fallout of de-leveraging and is a global fallout. Places that would be hit hard are those which were highly leveraged. Dubai stands has been highly leveraged. However, neighbouring Abu Dhabi has the capacity the bail out Dubai. Even the Dubai rulers of Dubai have the capacity to raise sources of funds but it will take time.The short and medium term is going to be tough with job cuts balloning and companies going burst.
Have lived over 25 years here and never experienced anything similar in all this time.The global crunch for the first time is really affecting Dubai. Hotel occupancy has dropped dramatically no matter what the industry tries to say and rates will have to drop too. There will be few tears shed on behalf of the properties who have has the boot on their foot for many years and never afraid to stick it to the tour opeators. It will be interesting to see how they like the view from the other side of the fence as they cannot remain in denial much longer.
If global tourism will decrease or at least not increase at the expected pace how can Dubai its hotels will be filled at the present price levels?
Post new comment