Gulf tourism faces challenges from economic downturn

Dubai offers some of the most luxurious hotels in the world, but many of these hotels are becoming out of reach for leisure travellers because of the economic downturn, according to Dalia El Nazer, Vice President of Sales for Kuwait-based Alshamel Travel and Tourism.

'Dubai's attraction as a tourist destination is lessening because of its high cost, especially for travellers who are bringing along the whole family,' she said.

Families are looking for value for money, and are increasingly choosing less expensive destinations such Lebanon and Egypt. Qatar is also getting more attention as it seen as a more affordable destination, she noted.

Dubai is also getting hit by the fact that an increasing amount of tourists say they want a 'true' Arabian holiday, and they believe that is something they cannot get in the emirate. 'You can get Middle Eastern food in Dubai, but you won't get an authentic Arabian experience here,' she said.

Travellers seeking more of an Arabic flavour are heading to places like Egypt, Jordan, and Lebanon. 'Still, you will always have people who say that you have got to see Dubai,' she noted.

During these difficult economic times, Dubai's tourism industry is also hampered by the fact that it offers few mid-priced hotels. However, addressing this problem will not be easy, as travellers to this region usually will not accept anything less than a four-star property.

'When people look at staying at a three-star hotel in this region, they think: Maybe I shouldn't do that. They are a little wary of what they might find,' she said.

Business travel keeps pace

Although leisure travel in Dubai faces challenging times, business travel in the emirate remains strong. Dubai is the 'Hong Kong of the Middle East', El Nazer says, and the flow of business travellers to the emirate has not diminished.

Sunil D'Souza, Country Manager, Kanoo Travel, agrees that there has been no slowdown in business travel to the emirate. The cash injection into the market by the Dubai government has helped to 'thaw the raw nerves' in the financial sector, and the emirate continues to be a hub of business.

In terms of leisure travel, D'Souza says he has not seen a significant drop, although he points out that most of his customers are wealthy travellers from the region, and those who have cancelled their travel have said they are merely postponing them until later.

Overall he has seen no impact from the financial crisis, but 'will there be a slowdown in three-six months? I cannot say'.

Airlines remain bullish

Airlines in the Middle East have faced even more challenges than hotels, as they have had to contend not only with the financial crisis but also from the spike in oil prices. However, Kuwait-based Jazeera Airways believes that it benefited from the oil price rise, as it created more wealth in the country and gave people more disposable income to use for travel.

Now that oil revenues have declined and the downturn is curbing leisure travel slightly, the low-cost carrier is targeting more business travellers, said Michael Hayden, Jazeera's Commercial Assistant Vice President.

The carrier is well-positioned to attract corporate travellers during these difficult economic times because its business class seats cost up to 70% less than traditional carriers and its flights tend to be short-haul (which lessens the need for on-board luxury). It also offers more flights than other carriers, which means travellers are less likely to need to stay overnight at a hotel.

Noting that Jazeera offers 'comfort, not luxury', Hayden says it took time to educate business travellers about the benefits of travelling on the airline. 'We feel that we have a huge advantage moving forward. Everyone now has to be cost-conscious, even in the Middle East,' he said.

BMI eyes growth

From its perspective, British carrier BMI has not seen any decline in air traffic in and out of the Gulf. It says its upcoming plans largely focus on boosting its routes in the region.

'Everyone is looking at the Middle East. Everywhere else is fragile,' said Philip Hedges, BMI's Marketing Manager for the Middle East and Africa.

The carrier recently announced plans to double its service from the Saudi capital Riyadh to London Heathrow from January 15. It has also increased its service to both Amman and Damascus to seven flights a week.

BMI flies eight times a day to the Middle East, the most of any UK carrier. The carrier is looking at where it can put in new capacity, while at the same time ensuring that it gets its scheduling right. 'We are looking closely at our prospects across all of the GCC,' he said.

See also:
Hidden treasures of the Middle East
Low cost carriers fly high in the Gulf