Hospitality revenue in the UAE is forecast to increase by 10.8 per cent annually from last year to US$9.8 billion by 2020, despite concerns over a slowdown this year in foreign visitor spending.
A steady growth in international tourists at 7 per cent annually, and the opening of new attractions such as theme parks, are expected to drive the increase, investment bank Alpen Capital said on Tuesday.
Tourism will, however, be hit by the strength of the dollar, to which the dirham is pegged.
“Depreciation of currencies such as the pound, euro and rouble against the US dollar affected tourism activity in the [Arabian Gulf] region,” Alpen Capital said. Continued weakness will negatively affect tourism, it said.
The UAE room count from hotels and hotel apartments will rise by 8.3 per cent until 2020 to touch 191,260, up from 150,393 this year, according to Alpen Capital. Of these, about 57,000 rooms are expected to come on stream in Dubai in the next five years.
The increased supply will put downward pressure on room rates in the UAE, with the average this year at $160 a night, down from $170 last year. It is expected to increase to $187 in 2020.
The average occupancy rate is expected to fall to about 73 per cent in 2018, from an expected 74 per cent this year, before rising to 77 per cent in 2020.
“Failure to attract a continuous flow of tourists prior to and even post the mega events in Dubai and Doha is likely to create an oversupply situation in the host countries’ hospitality sector,” according to Alpen Capital.
Meanwhile, travel spending by visitors to the UAE is expected to slow down this year, according to the World Travel and Tourism Council (WTTC), which represents the travel industry. The growth in expenditure by foreign tourists will slow down to 3.3 per cent to touch $26.9bn, marginally up from $26bn last year, when it grew at 4.3 per cent over the previous year, it said. That is still higher than this year’s global travel spending growth of 3.1 per cent, the WTTC said this week, down from its March forecast of 3.3 per cent.
The UAE Government’s spending on travel and tourism development is expected to grow by 2.2 per cent this year and by 4.3 per cent over the next decade, according to WTTC. For capital investment, it is 2.8 per cent growth this year and 6.8 per cent in the next decade.
“The UAE is one of the countries [in Middle East and Africa that is] ahead of the curve when it comes to tourism investment,” a WTTC spokeswoman told The National.
Follow The National’s Business section on Twitter