The tourists are back – and they want to shop till they drop

Creative Commons/Håkan Dahlström

• Hotel revenues rose sharply in Q1, as visitors returned to the UAE
• Dubai Mall and other shopping centres are a huge draw for tourists
• Expo 2020 has also raised the Emirates’ profile

Hotels in the UAE generated AED11 billion ($3 billion) in revenue during the first quarter of 2022, a 20 per cent increase compared with the same period in 2019 as Gulf tourism continues its recovery from the pandemic.

In other regions, tourism has been rebounding slowly and unevenly. According to a report from the UN World Tourism Organization, global tourism recorded a 4 per cent increase in 2021 compared to 2020, although international arrivals were still 72 percent below the pre-pandemic year of 2019. 

The UAE’s handling of the pandemic and the early reopening of Dubai has helped it recover faster — and retail continues to be a major draw for visitors. Dubai Mall, one the world’s largest shopping centres, is Dubai’s most popular attraction, drawing 97 percent of visitors, according to its owner Emaar Properties. 

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Top spenders

The main sources of inbound tourism spending in the UAE are Saudi Arabia, the US and the UK, said Stanislav Ismagilov, vice-president and head of crossborder at Visa CEMEA. China no longer sits among the top 10 spenders because of the country’s continuing lockdowns, but Ismagilov pointed to “considerable growth” among France and Germany as source markets for tourism spending in the UAE.”

Ahead of the World Cup, “a big surge is seen from Qatar – more than 700 per cent,” he added, placing the country in 11^th position in terms of its spending. A four-year land, sea and air blockade of Qatar by Saudi Arabia, the UAE, Bahrain and Egypt was lifted in January 2021, allowing for the resumption of intraregional travel and tourism.

Retail goods have remained the top category in terms of spending volumes, growing slightly higher than the market average, according to Ismagilov. He attributes this growth to the fact that spending in certain categories, such as restaurants, has nearly doubled. “We also see steady growth in the hospitality segment,” he said. 

Shopping festivals

Abu Dhabi and Dubai use extensive retail calendars to support tourism. Retail Abu Dhabi, which was launched in 2018, unites the emirate’s malls and retailers to promote the sector through campaigns, offers, events and raffles. In 2021, a programme was rolled out to help the recovery of the emirate’s tourism industry in the wake of the pandemic.

In Dubai, popular retail events include Dubai Shopping Festival and Dubai Summer Surprises, which offer shopping deals, firework displays, concerts and comedy shows. The emirate’s retail and festival offerings are promoted in source markets through the Department of Economy & Tourism’s network of international offices.

“Targeted outreach is aligned with events that resonate in these source markets, like GCC National Day celebrations, Eid in Dubai and Diwali in Dubai,” said Ahmed Al Khaja, chief executive officer at Dubai Festivals & Retail Establishment. “Throughout the pandemic, this has been targeted and retargeted, based on which routes are fully operational and which markets are open to inbound and outbound travel.” 

The Expo factor

Dubai’s hosting of Expo 2020 between October 2021 and March 2022 played a major role in helping the tourism sector’s post-pandemic recovery. Between January and May 2022, Dubai welcomed 6.17 million visitors, compared with 2.08 million in the same period in 2021.

“Events like Expo 2020 contribute towards elevating the global profile of Dubai. This hugely successful international showcase of business and culture has truly ushered in a new era for Dubai’s economy and tourism and opened the doors to incredible opportunities across sectors,” Al Khaja said. 

Al Khaja added that changes to UAE tourist visas later this year would strengthen retail tourism further. “With the extension of UAE standard tourist visas from 30 days to 60 days from September, we look forward to welcoming increasing numbers of visitors from across the globe and ensuring they enjoy Dubai’s retail offering,” he said.

VAT-free shopping is another incentive used to drive retail spending among visitors. The UAE introduced a 5 per cent VAT in January 2018, but visitors can claim back sales tax on purchases made in the country through a digital VAT refund system. Tourists then take their goods and tagged receipts to various validation points at the airport to finalise their refunds. 

Looking ahead, the emirate plans to keep prioritising retail tourism. Al Khaja said: “As wholesale and retail trade is the single largest segment of Dubai’s economy – representing 26 per cent of GDP – the Dubai government will continue to invest and innovate to support this priority sector. This includes developing and refreshing our annual festival calendar.”

Top 10 source markets for visitors to Dubai, January to May 2022

1 India
2 Oman
3 Saudi Arabia
4 UK
5 Russia
6 US
7 France
8 Germany
9 Pakistan
10 Iran

Source: Dubai Tourism