Gulf Tourism and Aviation

Four Seasons Hotels and Resorts says that it is seeing encouraging signs of recovery in the hospitality industry in the Middle East, especially in the leisure sector. The Canada-based luxury operator recently announced plans to open its first hotel in the UAE, one of several projects that it has underway as part of its expansion drive in the region.

Flights to most European airports have resumed as carriers question whether government agencies over-reacted in imposing a blanket ban on air travel. Following six days of restrictions, airspace over Europe's skies reopened, with the civil aviation authorities approving a number of flights in and out of the region's major airports - although a number of no-fly zones remain in place. Half of the region's 27,500 daily flights were expected to have resumed by the end of yesterday, according to the Brussels-based Eurocontrol aviation traffic agency.

In the wake of the economic downturn, funding for hotel projects has grown scarce and hotel operators are finding themselves competing for fewer management contracts. Large international hotel management companies are in a better position to capitalise on these trends than smaller regional brands, but they also face challenges in the current environment, experts say.

The volcanic eruption in Iceland continues to wreak havoc on Middle East carriers as flights to Europe remain cancelled. Meanwhile, European airlines have started test flights to determine how soon their fleets can take to the air.

A new report has found that hotels in Abu Dhabi suffered sharp declines in revenue and occupancy over the past year due to a rapid influx of new hotels in the capital. By contrast, revenues at Dubai hotels appear to be stabilising, perhaps indicating that the worst of the economic downturn is behind them.

The UAE has by far the largest number of hotels in the development pipeline in the Middle East, which could pose problems for the country's hospitality sector as it seeks to return to growth in the wake of the downturn. However, experts say it's difficult to predict when, and how many, of these hotels will actually come online and the extent to which additional supply will impact the market.

After bucking the global downturn in 2009, Middle East carriers show no sign of slowing down this year as passenger demand continues to rise and carriers add capacity and routes in a bid to capture a larger share of the global market.

More hotels are expected to change hands in Dubai in 2010 following a sharp slowdown in hotel investment last year, as economic conditions improve and demand rises for cheap assets. However, experts say that investment activity in Dubai's hotel sector is still likely to be relatively low due to the profile of owners in the emirate and rigidity of the market.

First and business class air travel throughout the world was hit hard by the economic crisis as individuals and companies cut back on their travel budgets. While premium travel was slightly more buoyant on Middle East routes, carriers in the region still face challenges as they try to attract more premium class traffic.

Over the past decade the UAE has gained a reputation as a luxury destination with the launch of numerous high-end hotels that have grabbed the attention of travellers across the world. Thanks to a steady rise in demand, room rates soared and remain among the most expensive in the world, but the onset of the global financial crisis has led to a sharp decline in revenues and occupancies across the country.

In the wake of the financial downturn, cruise tourism has emerged as the strongest growth area in Dubai's hospitality sector, with increased popularity expected in 2010 thanks to a new terminal facility and the arrival of more luxury cruise liners.

The worldwide attention being focused on the opening of the Burj Dubai is likely to provide a much needed boost for the tourism industry in the emirate.

The relatively strong performance of hotels in the Middle East - especially Lebanon and Saudi Arabia - compared to the rest of the world during the downturn is one of the major trends that have been seen so far in the region's hospitality sector in 2009.

Branding the UAE as one destination, rather than focusing solely on Dubai and Abu Dhabi, would greatly benefit the country's tourism industry, especially in light of the economic downturn and the Dubai World debt crisis, according to an industry expert.

A new study says the business jet market will continue to grow in the Middle East, led by Saudi Arabia and the UAE, and be a key driver for the airline industry in the region over the next decade in the wake of the economic downturn.