UAE Joins Top Tourism Ranks with $51.9 Billion Haul

The UAE has soared up the ranks from 13^th to 6^th place in international tourism receipts, raking in a hefty $51.9 billion in revenue in 2023. This milestone, which was revealed by the UN Tourism’s May 2024 World Tourism Barometer, has placed the UAE on a global pedestal shared by prominent countries like the U.S., Spain, the UK, France, and Italy, which secured the top five positions, respectively. Meanwhile, the U.S. claimed the prime spot in global tourism revenue in 2023, bringing in a staggering $176 billion.

Adding to its long list of accolades, the UAE also emerged as the number one tourist destination in the Middle East and North Africa (MENA) region. It also moved up seven spots in the world rankings, landing at number 18 in the World Economic Forum’s latest Travel & Tourism Development Index 2024. Additionally, it was ranked first globally for air transport infrastructure and second for infrastructure and services.

Business professionals and tourists alike have flocked to the UAE over the years to immerse themselves in a world of towering skyscrapers, crimson sand dunes, futuristic architecture, luxurious experiences, and vibrant cultural diversity. The UAE has undergone a remarkable economic transformation in recent years, actively reshaping itself as a global business hub. This transformation was fueled by a series of strategic initiatives, including streamlined business setups, expansion of foreign ownership, visa reforms, and regulatory enhancements – all of which have attracted highly talented labor from around the world.

Last year, the UAE’s tourism sector showed an impressive 26% YoY growth, effectively surpassing pre-pandemic levels by 14%. This contributed 11.7% to the nation’s GDP, totaling AED 220 billion. This year, the UAE is on track to welcome even more tourists from around the world. Numerous tourism campaigns in various countries are targeting the UAE as one of their top destinations. Additionally, the UAE launched the fourth iteration of its annual tourism campaign titled the ‘World’s Coolest Winter Campaign’ under the slogan “Unforgettable Stories”. This campaign seeks to enhance investment in domestic tourism projects and bolster revenue growth in the travel, hospitality, and aviation sectors, thereby elevating their contribution to the national economy.

The UAE’s hospitality sector exhibited remarkable growth in Q1’2024, as evidenced by the uptick in occupancy rates and revenues per available room (RevPAR). Abu Dhabi saw a 22% surge in the number of hotel guests per annum to 1.30 million visitors. Meanwhile, Dubai saw a 10.9% annual jump to 5.18 million international visitors in Q1’2024, marking a 9.1% jump from pre-pandemic levels. Dubai also recorded 6.68 million overnight visitors between January and April 2024, reflecting an 11% year-on-year growth. This represents 38.95% of 17.15 million international overnight visitors in 2023. The table below illustrates a breakdown of Dubai’s key source markets in the period between January 2024 to April 2024.

Dubai’s Key Source Markets between January 2024 to April 2024

Industry forecasts suggest a robust future for the UAE’s hospitality sector, with revenues exceeding $7 billion by 2026. The UAE is also attracting a horde of property investors after scrapping the previously required 50% down payment for property investments linked to the coveted 10-year Golden Visa.  Additionally, GCC ministers are aiming to launch a unified GCC tourist visa by the year-end, which will allow visa holders to travel to all six GCC nations – the UAE, Saudi Arabia, Qatar, Oman, Kuwait, and Bahrain.

The UAE aims to propel its tourism sector to even greater heights. This ambitious plan hinges on attracting AED 100 billion in investments and welcoming 40 million annual hotel guests by 2031. By achieving these targets, the strategy anticipates a significant boost to the tourism sector’s contribution to the GDP, reaching an estimated AED 450 billion. Meanwhile, the tourism sector is expected to contribute $64 billion to the UAE’s economy in 2024.

Dubai Mall, a cornerstone of the city’s retail landscape, is poised for significant growth.  Emaar Properties has announced a strategic expansion valued at AED 1.5 billion (approximately $400 million). This development will introduce 240 new retail experiences, encompassing luxury brands and diverse food and beverage options. In addition, construction of the new AED 128 billion Al Maktoum International Airport project has begun. Once completed, Dubai alone is expected to attract 150 million passengers each year. This will inevitably drive growth in the infrastructure sector as it will boost demand for property, hospitals, schools, and offices.

The UAE is also one of the fastest growing destinations for medical tourism for its superior infrastructure, a diverse range of services, and adherence to strict patient safety standards. As such, authorities have introduced medical visas for patients seeking treatment in the UAE. Another added advantage is the UAE’s strategic geographic location, placing it at the crossroads of Europe, Asia, and Africa. Industry experts estimate roughly 6,000 to 7,000 medical tourists travel via Dubai airports per day as they travel to countries like India, Germany, and Singapore for medical treatment. Analysts expect healthcare spending in the GCC to reach $124 billion by 2028. The Dubai Chamber of Commerce and Industry predicts a robust 7.5% annual growth for the UAE’s healthcare sector, reaching $10.7 billion by 2025. This expansion is expected to be mirrored by rising healthcare spending, with projections indicating an increase to 4.6% of GDP by 2026 and further up to 5.1% by 2029.

Article by Vijay Valecha, Chief Investment Officer, Century Financial

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