Dubai hospitality thrives despite rising costs

Dubai Tourism

• ‘Exciting December’ for sector
• Optimism high as tourism surges
• But operators warned over prices

Dubai’s hospitality industry reported a strong end to the year despite global economic turbulence and geopolitical concerns in the region.

According to the latest headline S&P Global Dubai Purchasing Managers’ Index (PMI), the emirate’s non-oil private sector posted its best performance for 16 months in December, buoyed by strong sales in wholesale and retail and “rapid growth” in travel and tourism.

Dubai International Airport had forecast an estimated 4.4 million passengers would be welcomed between December 15 and 31, with average total daily traffic reaching 258,000 passengers during the busy holiday season.

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“Overall it was an exciting December, with brands vying for coverage and consumers enjoying the vast options in F&B [food and beverage] and entertainment,” said Gabrielle Mather, founder and CEO of Restaurant Secrets.

Victor Chalfoun, general manager of the Waldorf Astoria DIFC hotel, said that despite the increase in the cost of living “people continued to express a strong willingness to dine out during the festive season”.

At 57.7 in December, the S&P Global Dubai PMI rose from 56.8 in November and posted well above the 50.0 mark that separates growth from contraction. 

The reading was the highest since August 2022 and the second-highest in four-and-a-half years.

“Firms enjoyed a rapid increase in new work, the second-quickest since the middle of 2019, confirming the strength of market demand across the emirate as we enter the new year,” said David Owen, senior economist at S&P Global Market Intelligence.

December’s PMI survey revealed that softening cost pressures allowed companies to offer greater discounts to customers throughout the month. Selling prices dropped at the fastest rate since June last year, which Owen said some respondents attributed to “a need to stay competitive”.

After slipping to a seven-month low in November, the latest survey data signalled a recovery in business expectations towards the year-ahead outlook at the end of 2023. 

Overall levels of optimism were at their strongest recorded since prior to the Covid-19 pandemic.

Despite the positivity, Naim Maadad, chief executive and founder of Gates Hospitality and a board member of UAE Restaurant Group, warned that hospitality operators should be careful not to price themselves out of the market.

“The city is becoming expensive like the rest of the world and we all need to stay focused and continue to provide affordable services and memorable experiences for our communities and residents alike,” he said.