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.

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.”

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