Since the late 1970s, the economy of the United Arabs Emirates (UAE) has grown significantly. Studies indicate that the rapid increase in economic growth in the United Arab Emirates is due to its thriving tourism industry. A study conducted by the National Council for Tourism and Antiquities in the year 2009 indicated that the UAE’s tourism sector had grown by 168 percent between the years 2001 and 2009. The United Arab Emirates is made of seven emirates, the economies of which are currently based on tourism. The main tourist attraction in Dubai is shopping. Both, leisure and business tourists flock the city of Dubai with intentions to shop various products in its magnificently built shopping malls and boutiques. For this reason, Dubai city has been named as the business hub of the Middle East region.
The tourism industry has had positive impact on the economy of the United Arab Emirates. It has contributed to the attraction of foreign investors who have invested in various auxiliary businesses to support the tourism industry. These businesses have been a great source of employment to the people of the United Arab Emirates. Consequently, income levels have increased over the years, resulting into a rise in the standards of living, which have, in turn, resulted into a significant improvement of the health care sector. In addition, the tourism industry has led to the development of the transport and hospitality industries and the development of close trade ties with various countries of the world.
Introduction: Tourism Industry in UAE
The economy of the United Arab Emirates (UAE) was built using revenue generated from its thriving oil industry back in the mid-1900s (KAMCO Research, 2011). However, since the completion of the Jebel Ali port in the 1970s, UAE has turned into a tourism hub. Currently, Dubai city is one of the important tourism destinations of the world. Since the late 1970s, the economy of the UAE has grown significantly. Its GDP and GNP have increased substantially. According to Sadify (2011), tourism contributes approximately 7.4 percent to the UAE’s GDP and 11.7 percent to its GNP. The amount of foreign cash flowing into the country has also increased significantly. Economic analysts attribute the substantial economic growth of the UAE economy to the rise in its tourism industry. A study conducted by the National Council for Tourism and Antiquities in the year 2009 indicated that the UAE’s tourism sector had grown by 168 percent between the years 2001 and 2009 (KAMCO Research, 2011).
Studies reveal that internationally, the tourism industry has had positive impact to overall GDP figures of many economies (Lynn, 2007). According to Lynn (2007), the positive contribution of the tourism industry in many of the world’s economies is set to increase, particularly in the emerging economies. The world’s economic statistics indicate that in the year 2005, total spending on travel and tourism was approximately US$5.9 trillion. This increased to US$6.5 trillion in the year 2006 (Lynn, 2007).
The UAE is made of seven emirates. Dubai is the most popular emirate, because it is endowed with oil products, natural gas, and the tourism business currently thriving. Dubai has its own government, which pays great attention to the tourism industry. In fact, the government of Dubai has placed the tourism industry as its core strategy for ensuring a constant flow of foreign currency into the entire UAE. The main tourist attraction in Dubai is shopping. Both, leisure and business tourists flock the city of Dubai with intentions to shop various products in its magnificently built shopping malls and boutiques. For this reason, Dubai city has been named as the business hub of the Middle East region (Sadify, 2011). Business tourists visiting Dubai city are drawn from as far as Europe, India, and Africa. Business tourists, as well as leisure tourists shop for electronics, jewelers, cars, clothing, and sporting equipments either for resell in their home countries or for personal use. Commonly, departmental stores, supermarkets, boutiques, and some electronic shops sell on fixed-price basis, while other retail and wholesale outlets sell their products on negotiation basis (Sadify, 2011).
Apart from shopping tourism, the UAE draws its tourism revenue from cultural tourism (Sadify, 2011). Despite the numerous developments in Dubai and other emirates, UAE preserves its culture, which remains a big tourist attraction to foreigners. Numerous cultural aspects of the UAE are found in places located around the Creek. The Creek is a geographical feature, which splits Dubai into two parts: Deira and Bur Dubai. The Heritage Village and the Diving village located in the Creek draw a large number of tourists who love the flavor of an old city, as well as those who love fishing and diving. Currently, there are plans to transform the Diving Village into a cultural city, thus recreating Dubai as it was in the past (Sadify, 2011).
Other tourism sites that have had enormous contribution to the economy of the UAE include the Dubai Museum, commonly known as the Sheikh Saeed Al Maktoum House. The museum is located in the refurbished Al Fahidi Port, which was built in the late 1700s. Another tourism attraction site is the Heritage Village of Hatta Mountains. It is located on the southeastern side of Dubai City: approximately 115 kilometers from the city. The Heritage Village of Hatta has a history of over 2500 years.
The Impact of Tourism Industry to the UAE Economy
One of the impacts of tourism industry on the UAE’s economy is the development of its transport sector (Agenda for Freedom, 2009). Almost all capital cities, as well as other cities within the region are serviced with direct flights to Dubai City. This is to enhance travelling from the Dubai City to other cities within the region, because the main point of entry to the UAE is located at Dubai City: Dubai International Airport. Currently, the region is served with more than 120 airlines, which operate directly from the Dubai International Airport to approximately 260 destinations within the region. Due to the high number of airlines operating in the region, the UAE has become one of the busiest regions in the world.
Consequently, other transportation infrastructures in the region have developed significantly. All urban areas are served with good roads, which enhance movement of tourists within the urban areas. In addition, roads connecting major cities with smaller cities, as well as towns are also well developed. Generally, the tourism industry has contributed to great improvement of the transportation sector in the UAE.
Notwithstanding improvement of the transport sector within the region, tourism has enabled the region’s biggest airline to participate in and reap heavily from the global transportation industry. The Emirates Airline – the international airline of the UAE operates scheduled services to more than 100 destinations of the world and is a Dubai based airline (Agenda for Freedom, 2009). When the tourism industry started to flourish in the region, the Emirates Airline used to operate from Dubai City to limited destinations of the world. However, as the region continued to experience growth in the tourism sector, the airline has also increased its operations. Tourists from Europe, Asia, and other continents of the world can obtain direct flights to Dubai City from their homes or neighboring countries within their continents. This has made Emirates Airline to be an airline of choice for many travelers traveling to the UAE. Besides, the airline has been able to enhance its service delivery, whereby it provides a special handling area for people with disabilities or other special needs. As a result, over the years, Emirates Airline has grown substantially, thus, making great economic contribution to the economy of the UAE by opening it to the rest of the world.
According to Jain (2010), the year 2010 was a very successful year for Emirates Airline. Its operations increased on monthly basis. For instance, in July 2010, the airline opened new operations in Prague, followed by Madrid in August 2010, then Dakar in September of the same year. Early in the year 2010, the airline had launched new operations in Amsterdam and Tokyo. According to the airline’s senior vice-president, Richard Vaughan, the airline planned to open six additional routes in various parts of the world before the end of the year 2011. Jain states that the airline mostly serves business and leisure tourists traveling to and from the UAE (2010). It is, therefore, clear that the growth of the tourism industry in the UAE has contributed to transformation of what was started as a regional airline, to an international airline.
The UAE’s tourism industry has also contributed to creation of the ‘brand Dubai’ (Jain, 2010). Brand Dubai was created in 1997, with an aim of creating awareness and enhancing the image of Dubai, as well as that of other emirates to the rest of the world. Since its formation, Jain states that the emirates have achieved huge inflows of foreign direct investments in various sectors of the region’s economy (2010). In fact, Jain points that the increase in volume of foreign direct investments in the region is being driven by the tourism industry. Various multinational companies and other forms of investors have been investing in businesses which provide auxiliary services to the tourism sector. Such services include banking, marketing, transport, and accommodation services. These investors have been making great contribution to the UAE’s economy in terms of creating employment opportunities, as well as contributing to the region’s revenue through income tax to the government (Jain, 2010).
Lynn (2007) agrees with Jain’s sentiments concerning the impact of tourism industry to the UAE’s economy in terms of employment creation. Lynn states “the effects of the tourism sector on regional economies have proven to be paramount and have positively driven employment and income levels in the region.” Currently, the unemployment rate in the UAE is very low. Influx of businesses providing supporting services to the tourism sector has helped to reduce the rate of unemployment in the region. These businesses absorb both skilled and unskilled workers. For instance, the hotel industry makes use of unskilled and semi-skilled workers in blue-collar jobs such as cooks, messengers, and cleaners. Skilled workers are also absorbed in these businesses where they work as managers, supervisors, accountants, administrators, clerks, among other white-collar jobs.
For this reason, the income levels in the region have grown drastically over the years, because almost every individual has a source of income either as an employee or as an employer. Consequently, the poverty levels in the region have reduced by big margins. According to economists, increase in income levels among individuals of a given economy means rise in the standards of living. Therefore, the standards of living for the people residing within the region have drastically risen, which has obviously been accompanied by enhanced health care services (Lynn, 2007).
Notably, of all other businesses providing supporting services to the tourism industry, the hotel (hospitality) sector has experienced significant positive impacts over the last decade (KEMCO Research, 2011). Studies indicate that the number of hotels and hotel apartments has grown by 10 percent within Dubai City over the past two years. By the year 2010, the total number of hotels and hotel apartments in Dubai City stood at 540. This was a substantial increase from the year 2009, which stood at 493. It has been projected that the number of hotels and hotel apartments in Dubai will increase to almost 1,000 by the year 2016 (KEMCO Research, 2011). Correspondingly, in the year 2009, the number of hotel rooms and hotel flats in Dubai increased to 61,487. This was a 22 percent increase from the previous year, whereby the total number of hotel rooms and flats stood at 50,457. According to data provided by brand Dubai, the total number of guests who were accommodated in hotels and hotel apartments in the year 2009 was 7.58 million, a one percent increase from the previous year (Jain, 2007). The high number of hotels in Dubai, as well as in other emirates has contributed to narrowing of the unemployment rate in the region, through provision of employment opportunities. This has led to increase in the GDP due to increase in amount of disposable income among the citizens of the UAE.
Likewise, development of the hotel industry has contributed to economic development of the emirates due to its contribution to infrastructure development, especially in the urban areas. Most of the magnificent buildings found in the urban areas of the emirates, house some of the biggest four and five star hotels in the region. In addition, in terms of infrastructure development, the hotel industry has made great contributions to property development, not only in the industry itself, but also in the real estate business, where the hotel industry has been making huge investments.
In the year 2007 during the World Economic Forum, it was pointed that the tourism industry has also enabled the UAE to develop trade relations with various countries of the world (World Economic Forum, 2007). Studies indicate that the top source markets for the UAE’s tourism sector are the UK, Iran, and India. In the year 2009, guests from these countries were 1,728,533 individuals. In the same year, the volume of trading activities, which took place between traders from these countries and those from Dubai and other emirates increased, as compared to previous years. This indicates that many tourists not only travel to the UAE for leisure, but also travel for business purposes. Increased trade between Dubai traders and traders from other regions of the world can be attributed to low costs of imports and exports due to the presence of a free port: the Jebel Ali Free Zone (World Economic Forum, 2007). Moreover, the UAE have been able to develop close trade ties with Germany, Pakistan, Italy, France, Australia, Russia, China, and Canada among other nations, which form part of its top 20 source markets for the tourism industry. Many tourists visiting the UAE do not fail to buy a thing or two in Dubai City. This has lead to development of trade between Dubai and the rest of the world, as many people visit the region specifically to shop for products either for personal use or for resale.
The tourism industry in the UAE has also led to the development of the MICE (meetings, incentives, conferences, and exhibition) sector (The Effects of Tourism on Dubai, 2010). This started in the year 2003 when the Dubai Convention Bureau was launched. The MICE sector caters for business tourists who prefer to hold business functions or events in exotic places. This sector has been making great economic contributions to the economy of the UAE through employment and revenue generation to the government. In the year 2009, the sector earned Dh362 million for Dubai through hosting delegates for various business forums (The Effects of Tourism on Dubai, 2010).
Generally, the tourism industry has had great economic impact on the economy of the United Arab Emirates in a positive manner. It has contributed to attraction of foreign investors who have invested in various auxiliary businesses to support the tourism industry. These businesses have been a great source of employment to the people of the United Arab Emirates. Consequently, income levels have increased over the years, resulting into a rise in the standards of living, which have, in turn, resulted to considerable improvements in the health care sector. In addition, the tourism industry has led to the development of the transport and hospitality industries, the MICE sector, and development of close trade ties with various countries of the world.