The global pandemic has highlighted the need to stimulate UAE domestic tourism – a trend that is not completely new and that has been growing over the last few years, and UAE residents are showing an increasing interest in the exploration of the country and in the discovery of its tourism assets.
According to the WTTC, most of the top tourism destinations worldwide rely to a large extent on domestic tourism. The UAE presents the opposite trend, where tourism relies largely on international spend, with half of demand split between Europe and Asia.
Bruno Trenchard, Senior Consultant in the CBRE Hospitality & Leisure division commented, “After several years of a relatively modest increase in demand, domestic tourism in the UAE has really picked up pace as a result of the covid-19 pandemic. This growth is expected to accelerate in the coming years due to previously existing underlying market trends and market maturation. Currently Dubai attracts 44% of the demand from UAE nationals. Abu Dhabi benefits from its status as the country’s capital city to attract 32% of UAE nationals and the Northern Emirates represent a smaller share of demand relying mostly on the sun and sea offering.“
Market growth is expected to create incremental demand for hotels and other types of tourism accommodation but there needs to be a change in investor’s approach to ensure that newly developed properties are properly designed and positioned to capture this market. Specific benefits are:
Reducing the reliance on inbound (international) visitors
Reducing exposure to international events, crises, and security issues
Reducing exposure to currency risk
Increasing hospitality market size through induced demand
Increased spending on hospitality from UAE residents within the country
Increasing overall hospitality revenues in the UAE
Stronger sense of belonging
Fostering discovery of the country by residents and nationals
Fostering a stronger sense of belonging to the country for residents
The UAE already offers a wide range of tourism attractions and the CBRE report, “UAE Domestic Tourism” states that a wider variety of activities can be developed in order to appeal to a broader base of domestic tourists. These activities can be expected to provide a more in-depth experience of the country and the varied attractions that can be enjoyed by domestic travelers. Activities can potentially be organized by the hotel operators themselves or by third parties for some of the more specific ones.
Some amendments in legislation, such as the recent changes announced by DTCM on overnight stays at desert camps will be beneficial to support more diversity in the offering.
The different ways domestic tourism creates hospitality demand:
Daycations - use of a hotel room for the day Limited creation of demand for hotels due to the short nature of the stay, popular with resorts in the higher end of the market.
Staycations - hotel overnight stay in the guest’s place of residence Some demand created for hotels as staycations can last a few nights and popular mostly with resorts in the higher end of the market.
Getaways - short overnight stay within the country Creates some level of demand for hotels and can be used to fill properties during low occupancy days and can potentially target all market segments
Holidays - “standard” holiday taken within the UAE Creates the most demand for hotels due to the length of the stay and benefits properties in all market segments.
The resort offering in the UAE is currently focused on the 5-star segment with most properties in the upper-upscale and luxury categories. This implies a relatively high and hence selective price point. Reactivity from developers in adapting their projects to a different type of demand and in pursuing new opportunities will be instrumental in supporting and capturing the expected growth in demand from domestic tourists.
Domestic tourism is a major driver of tourism globally. However, despite demand already existing, the UAE is lacking the dynamism and level of demand of its international peers. There has been growth in the sector in the last few years and the market has potential.
However, support is also required from the government to help develop new tourist attractions. Investors will need to slightly change their approach to development projects to ensure that their hotels have the necessary characteristics to attract domestic demand and that they are positioned in one of the numerous segments (glamping, midscale resorts, etc.)where opportunities can be identified.