UAE hotels bet on new source markets and domestic tourism for 2021 recovery

DUBAI - Hotels in the UAE are hopeful that 2021 will be a year of gradual recovery from the COVID-19 crisis as tourists return to the country and occupancy levels start to rise.

The optimism is on the back of diplomatic reconciliation with Qatar and the normalization of ties with Israel, as well as the UAE’s new domestic tourism strategy, visa reforms, and fast mass COVID vaccination.

“Opening the borders with Qatar will have a direct and indirect impact on occupancy levels. The direct impact will be having Qataris visit the UAE once again, both corporate and leisure travellers,” Mamdouh Ali, general manager of Rose Rayhaan by Rotana told Salaam Gateway.

“As for the indirect impact - some European tour operators were using Qatar Airways as a carrier for tourists who want to spend their vacation in the UAE because of the airline’s competitive pricing, so hopefully this trend will continue after the borders are reopened,” he said.

Rose Rayhaan by Rotana, an alcohol-free four-star property in Dubai and the world’s third tallest hotel, started registering an uptick in occupancy from the fourth quarter of 2020. Its occupancy rate currently stands at around 80% and pick-up in 2021 has so far been good, according to Ali.

Dubai hotel occupancy in December hit its highest level since the start of the coronavirus pandemic, with many operators linking the rebound to ‘workations’, where guests combine remote work with a hotel stay, according to London-based analytics firm STR.

While average occupancy levels in the emirate were at 71% in December 2020, down 10% year-on-year, they were the highest since January last year.

THE ISRAEL FACTOR

The UAE’s hotel sector is also expected to benefit from Israeli tourism in the coming months.

About 50,000 Israeli tourists visited the UAE since the two countries signed the Abraham Accords normalization agreement on September 15, Israel’s Tourism Minister Orit Farkash-Hacohen said during the UAE-Israel tourism forum, which took place online in December.

Several UAE airlines have started flights to Israel. Flydubai currently operates 14 flights a week between Dubai and Tel Aviv, and Emirates and Etihad Airways plan to start direct flights in 2021. Israel’s Israir and El Al Airline currently operate flights to the UAE, and Arkia Airline launched flights to Dubai in early January.

“Israeli tourists are one of the long stayers in the Middle Eastern market, and they are eager to visit and explore the UAE. This will positively affect our occupancy levels, especially over the summer, and since they often travel as families and stay longer than other visitors from the region, so the impact will be in the volume of tourists and number of room nights,” explained Ali.

Rotana Hotels is working on a plan to introduce kosher cuisine at its properties to cater to the different preferences of their guests.

Time Hotels, which operates six alcohol-free properties in the UAE, also plans to offer kosher meals, the company’s CEO Mohamed Awadalla told Salaam Gateway.

The move comes four months after a circular was sent from the Department of Culture and Tourism – Abu Dhabi to hotels advising them to provide kosher options.

Israelis made more than 9 million international trips in 2019, double the number of trips taken in 2010, according to the country’s Central Bureau of Statistics.

By 2022, the average length of stay for Israeli tourists will be 11.5 nights, forecasts the Dubai Government’s Department of Tourism and Commerce Marketing. This indicates a preference to embark on longer trips, with business and leisure visitors making up 53% of the total outbound market.

DOMESTIC TOURISM

Last year following the outbreak of COVID-19 and travel restrictions, hotels in the UAE focused on domestic tourism, offering staycation deals, food and beverage discounts for in-house guests, free upgrades, and booking flexibility.

Time Hotels offered UAE residents a 30% reduction and it is currently extending a discount of 1,600 dirhams ($435) on long stays of more than three months at Time Onyx Hotel Apartments.

Collectively, the hotel sector’s efforts have led to a significant growth in room nights sold to domestic visitors between May and October 2020, from around 2.74 million in 2019, to 5.68 million in 2020, an increase of 107% year over year, according to Dubai Tourism statistics.

With the complications involved in planning for a vacation abroad, including multiple COVID-19 tests and mandatory quarantines, residents continue to opt for local holidays.

To support the hotel sector’s efforts, the government in December launched the UAE Strategy for Domestic Tourism and it rolled out the first federal domestic tourism campaign titled 'World's Coolest Winter'.

The 45-day campaign, overseen by the Ministry of Economy in collaboration with local tourism entities, encourages residents to explore and rediscover the seven emirates that form the UAE.

Domestic tourism in the country contributed 41.2 billion dirhams ($11.2 billion) to the national economy in 2019, accounting for 23% of total tourism revenue. The new strategy aims to double this number.

RECOVERY

International tourists are also flocking to the UAE to escape harsh winter lockdowns in their own countries.

“We are already seeing business coming back from the Commonwealth of Independent States (CIS) markets and some parts of Europe. Although it will certainly take time to return to pre-COVID levels, we remain positive,” said Awadalla.

He noted that health and hygiene procedures will continue to be a top priority for the industry to ensure a safe environment for guests and employees.

“The UAE’s hospitality sector is an integral part of the economy and has always proved resilient. Initiatives recently launched by the government will also help the recovery process, including the new remote working visa, the extension of the government’s stimulus package, the launch of the retirement programme for expatriates and foreigners over the age of 55, as well as other initiatives such as tourism promotion,” said Awadalla.

“The Expo towards the later part of 2021 will also provide a tourism boost to Dubai and the wider UAE,” he said. The Expo was pushed forward a year, and is now scheduled to to open in October this year. It will run till the end of March 2022.

As the UAE’s economy gradually recovers, new hotel establishments are opening their doors.

The Address Beach Resort in Dubai’s Jumeirah Beach Residences, and DoubleTree by Hilton Dubai M Square in the historic district of Bur Dubai, both opened in December 2020.

Avani Palm View, the Thai hotel chain's third hotel in Dubai, opened in January 2021. Meanwhile, Radisson's second hotel in Fujairah on the UAE’s east coast is slated to open this year.

International groups are also eyeing the market. India’s Morpho Hotels and Resorts recently announced it would expand to the UAE in 2021 with five new hotels.

“The hotel sector in the UAE influences and reflects the overall economic situation. We are an industry with remarkable numbers of employees and suppliers supporting our businesses. When we have cashflow, clientele and income, we are contributing and distributing the cash to our suppliers and colleagues,” said Ali.

“Our industry also reflects the health of the economy. When tourism, which is driven by airline carriers, is active, and when we have healthy room rates and occupancy levels, it reflects the strong performance of the economy.”

(Reporting by Heba Hashem; Editing by Emmy Abdul Alim [email protected])

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