DUBAI – Dubai’s tourism industry slowed in the first quarter with hotel guest nights falling 16 percent and revenues dropping 15 percent as a global recession hit the sector, official data showed.
Gulf commerce and trade hub Dubai, which attracts more visitors each year than any Arab country outside of Egypt, hosts a major shopping festival in the first quarter that typically attracts streams of regional visitors.
But a downturn in travel for leisure and business purposes pushed the number of guest nights at Dubai hotels down 16.4 percent in the first three months to 3.87 million, data from the Department of Tourism and Commerce Marketing (DTCM) showed.
The total number of hotel guests, excluding hotel apartments, grew 3.7 percent in the three months to 1.62 million, DTCM said in data received by email on Sunday.
As people stayed fewer nights and hotels reduced room rates to stay competitive, hotel revenues witnessed a 14.9 percent fall to 3.14 billion dirhams ($854.9 million), the data showed.
“The drop-off in demand is hardly surprising,” HSBC economist Simon Williams said in a client note on Monday.
“Three of Dubai’s key tourist markets — the UK, the euro zone and Russia — are in recession, with depressed consumer confidence and rising unemployment weighing heavily against discretionary leisure spending.”
With a dearth of macro-economic data available in the United Arab Emirates, economists and investors have been watching for trends in the real economy to judge how severe a toll the global recession is having on the region.
The UAE is the world’s third-largest oil exporter but most oil reserves are in Abu Dhabi. Dubai gets only 3 percent of its GDP from oil, relying instead on construction, retail, tourism, trade and financial services for its revenues.
During an economic boom spurred by high oil prices, Dubai attracted visitors with promises of year-round sunshine to hotels including the sail-shaped Burj Dubai and its neighbour the Jumeirah Beach hotel, designed to look like a breaking wave. But as the emirate suffers from a property crash, retailers say sales have dropped.
“Tourist arrivals are important not only for the hotel industry itself, but also the broader service and retail sector,” HSBC said.
Occupancy rates for hotels in Dubai fell to 73 percent in the first quarter from almost 90 percent last year, DTCM data showed. Meanwhile, the number of people staying in hotel apartments, which offer family-sized serviced accommodation, rose 14 percent in the first quarter while guest nights rose 2.5 percent.
Consumer confidence in the UAE fell sharply in the six months to April with residents worried about job security fearing the oil exporter faced recession for longer than a year, market research firm Nielson said last week. ($1=3.673 dirhams)