NEW TRADE ROUTES ARAB

China and Afri­ca’s eco­no­mic growth has gi­ven hun­dreds of mil­lions of ci­ti­zens dis­po­sable in­come, which some are using for ho­li­days in Dubai, finds Ju­dith Evans. But can the ci­ty cope with the new­co­mers?

La Presse Business (Tunisia) - - SOMMAIRE - By Ju­dith EVANS

Dubai is known for ta­king hos­pi­ta­li­ty to ex­cess: the world’s tal­lest hotel, rooms cos­ting $24,000 a night, re­pli­cas of Ara­bian and Rus­sian pa­laces. But de­ve­lo­pers in the emi­rate are tur­ning their at­ten­tion to tra­vel­lers on more mo­dest bud­gets in an at­tempt to lure the gro­wing middle classes of China and Afri­ca to shop, trade and take ho­li­days. “We are ex­pec­ting an in­crease in that mar­ket, a need for more three- and four-star hotels and re­sorts,” says Ali Ra­shid Loo­tah, chair­man of Na­kheel, a state-ow­ned pro­per­ty com­pa­ny. “Our fo­cus now is on the more af­for­dable bra­cket,” he adds. His com­pa­ny ope­ned the first of 10 plan­ned hotels and re­sorts in Fe­brua­ry, a three-star Ibis Styles hotel lin­ked to Dra­gon Mart - a shop­ping and who­le­sale centre which claims to be the lar­gest Chi­nese tra­ding hub out­side China. Dra­gon Mart has pro­ved so po­pu­lar that it was ex­ten­ded last year to more than double its space, and Mr Loo­tah plans ano­ther hotel there. Ma­ny na­tio­na­li­ties vi­sit Dra­gon Mart, but the ex­pan­sion is foun­ded part­ly on­hopes for a steep in­crease in num­bers of Chi­nese vi­si­tors, of whom 450,000 pas­sed through Dubai in 2015. This was 29 per cent up on the pre­vious year but far be­low the mil­lion-plus people who vi­si­ted from In­dia, Sau­di Ara­bia and the UK, ac­cor­ding to go­vern­ment sta­tis­tics. “We ex­pect Eu­ro­peans, Rus­sians and lo­cals from the GCC [Gulf Coo­pe­ra­tion Coun­cil] to conti­nue co­ming, but we ex­pect ma­ny more Chi­nese and Afri­cans to come,” Mr Loo­tah says. There are am­bi­tious fo­re­casts for the rise of China’s middle class: a re­port from the Bos­ton Con­sul­ting Group and AliRe­search last year said China’s emer­ging-middle and middle classes would grow by 5 per cent a year bet­ween 2015 and 2020, while the up­per-middle and “af­fluent” classes would in­crease by 17 per cent a year over the same per­iod. Meanw­hile, ac­cor­ding to Gold­man Sachs, on­ly 3 per cent of Chi­nese people have pas­sports. Some 4.1m Ni­ge­rians - 11 per cent of the po­pu­la­tion - can now be des­cri­bed as middle class, ac­cor­ding to Stan­dard Bank, a South Afri­can bank, al­though the coun­try’s eco­no­mic down­turn casts doubt on the re­port’s pre­dic­tion that 11.7m people will be in the middle class by 2030. Na­kheel’s plans play in­to a broa­der go­vern­ment stra­te­gy of in­crea­sing mid-mar­ket hotel avai­la­bi­li­ty to help boost to­tal vi­si­tor num­bers to 20m a year by 2020. Two years ago Dubai of­fe­red a se­ries of in­cen­tives to de­ve­lo­pers of three- and four-star hotels, such as wai­ving night­ly mu­ni­ci­pal charges on hotel stays for a set per­iod and al­lo­ca­ting go­vern­ment land for the pro­jects. They al­so tal­ly with at­tempts by the ru­ling al-Mak­toum fa­mi­ly to forge clo­ser links with China and sub-Sa­ha­ran Afri­ca, and ex­pan­sion of flights by the state air­line Emi­rates to these re­gions. Sheikh Mo­ham­med bin Zayed al-Na­hyan, crown prince of Abu Dha­bi, vi­si­ted Bei­jing in late 2015, while a string of Afri­can heads of state in­clu­ding the lea­ders of South Afri­ca and Ni­ge­ria have vi­si­ted the emi­rate this year. Ho­we­ver, the new tou­rism push comes as growth in the sup­ply of hotels is outs­trip­ping de­mand: des­pite a 7.8 per cent year-on-year in­crease in vi­si­tor num­bers in 2015, oc­cu­pan­cy de­cli­ned by 1.4 per cent to an ave­rage 77.5 per cent, ac­cor­ding to De­loitte. Re­ve­nues per avai­lable room, a com­mon­ly used me­tric, drop­ped 8.7 per cent. The pro­fes­sio­nal ser­vices firm says ano­ther 31 hotels due for com­ple­tion this year

mean that the gap bet­ween sup­ply and de­mand will wi­den fur­ther in 2016 and 2017. But it ex­pects vi­si­tor num­bers to in­crease again in the run-up to Dubai’s hos­ting of Ex­po 2020, a world’s fair last held in Mi­lan in 2015. Mur­ray Strang, head of Dubai at Clut­tons, the pro­per­ty ad­vi­sers, echoes these concerns. “At most le­vels the hos­pi­ta­li­ty mar­ket is pret­ty well sup­plied, and there are three years to go un­til the ex­po,” he says. Dubai - which is a se­ven to eight hour flight from Bei­jing and about the same from La­gos - is wor­king to in­crease awa­re­ness in tar­get mar­kets. Its tou­rism bu­reau this year car­ried out a road­show in three Ni­ge­rian ci­ties, see­king to raise its pro­file in its big­gest Afri­can source of cus­to­mers. Hotels have fo­cu­sed on adap­ting to the Chi­nese mar­ket in par­ti­cu­lar. In­terCon­ti­nen­tal Hotels Group (IHG) last year in­tro­du­ced a “China Rea­dy” sta­tus, a cer­ti­fi­ca­tion it gives to its hotels that ful­fil cri­te­ria in­clu­ding Man­da­rin-spea­king staff, ac­cep­tance of Chi­nese bank cards and Chi­nese tea for guests. Six of its Dubai hotels have the sta­tus. IHG says Chi­nese vi­si­tors have spent 70 per cent more nights in its Dubai hotels in 2016 than in the same per­iod last year, but “guests from Afri­ca seem to have mar­gi­nal­ly re­du­ced their boo­kings”. An­drew Sang­ster, edi­tor of in­dus­try pu­bli­ca­tion Hotel Ana­lyst, says that Dubai has so far de­fied fears that it might suf­fer from hotel over­sup­ply, part­ly thanks to tou­rists tra­vel­ling there ins­tead of to des­ti­na­tions such as Egypt and Tu­ni­sia, where they fea­red fur­ther ter­ror at­tacks. But he says he is concer­ned that the pre­pa­ra­tions for Ex­po 2020 could lead to “un­viable pro­jects get­ting the green light”. “All of his­to­ry shows that when you have a one-off event such as the Olym­pics, people get bam­booz­led by the pros­pect of a short-term blip. You get classic over­buil­ding.” Mr Sang­ster says Dubai will al­so face a de­li­cate ba­lan­cing act in at­trac­ting middle-class guests along­side the exis­ting stream of weal­thy vi­si­tors who like the ci­ty’s sense of ex­clu­si­vi­ty. Mr Loo­tah brushes off concerns that the hotel mar­ket could find it­self in over­sup­ply. He says that if even a small ad­di­tio­nal frac­tion of those who al­rea­dy pass through Dubai en route to el­sew­here can be per­sua­ded to spend time in the emi­rate, that will sup­port growth in vi­si­tor num­bers. Last year 78m people pas­sed through Dubai In­ter­na­tio­nal, the air­port’s ope­ra­tor says, the hi­ghest num­ber in the world for the se­cond year run­ning. “Even after the end of the ex­po, there will be more vi­si­tors. It will raise our pro­file, raise people’s know­ledge of Dubai,” says Mr Loo­tah. “The growth of Dubai will conti­nue - and we will still have a shor­tage of hotel rooms.”

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