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Daniel Richards - MENA Economist
Published Date: 09 June 2022
Dubai’s tourism sector continues to make a robust recovery from the pandemic crisis. Over the January-April period, the total number of visitors hit 5.1mn, representing a more-than 200% increase on the 1.7mn welcomed over the corresponding period in 2021. While this is still around a fifth off the pre-pandemic level – there were 6.3mn visitors to Dubai over January-April 2019 – it marks a substantial improvement on the past two years, with most of the pandemic-related drags on the sector now behind it.
Oman has, surprisingly, been the biggest source of visitors so far this year, with 590,000 over the first four months. This is up hugely compared to the pandemic-affected 2021 period (30,000) but also pre-pandemic 2019, when Oman was in fifth place with 356,000. The rest of the top five (in order: India, UK, KSA and Russia) have also recovered sharply from the past two years but remain down on 2019 levels. However, it is worth bearing in mind that the start of the year saw the Omicron wave of Covid-19 infections limit travel once again and this has weighed on the sector. As the threat from the virus has receded in the face of vaccinations and higher immunity levels, most countries have eased any remaining limits on travel in the subsequent months and Dubai has benefitted as a result. However, with China still pursuing a zero-Covid strategy, this will remain a drag on Dubai’s tourism sector for as long as it is in force. Over the first four months of 2019, China was the fourth-largest source of visitors to Dubai at 369,000.
Source: Dubai Department of Economy & Touirism, Emirates NBD Research
The growth in visitors this year has been reflected in the PMI surveys for Dubai, where the travel & tourism sector has outperformed wholesale & retail trade and construction in recent months. The sub-survey for the sector showed it expanding at a near three-year high in May, suggesting that visitor numbers continued to show strong growth last month also. Nevertheless, this strong growth has in part been realised through sharp discounting on the part of businesses, and with input costs continuing to accelerate given the global and domestic inflationary dynamics at play, firms’ margins are under pressure.
While business optimism has been under pressure in the difficult environment of the past several years, the sector has continued to expand, and there are now 769 establishments in the tourism space, compared to 714 in April 2021 and 722 in April 2019. The number of rooms now available has risen 10% y/y to 140,336, and the average occupancy has been at around 75% over January to April (falling from 91.6% in March to 58.6% in April according to STR data). Hotel apartments have been the relative outperformers with 81% occupancy rates, perhaps reflecting extended stays related to EXPO 2022 over January to March. RevPAR has almost doubled compared with last year, rising from AED 252 to AED 488 this year.
Dubai International has also staged a strong comeback this year, with the regional hub handling 13.6mn passengers over the first quarter, up 167% on the 5.7mn that passed through in Q1 2021. While this remains almost a quarter down on the 17.8mn passengers handled in Q1 2020, the strong figures have given grounds for optimism, and CEO Paul Griffiths now expects that pre-Covid levels could be achieved as soon as 2024.
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