Outlook for UAE leisure travel, tourism improves; vaccine passports can help

Corporate travel won't recover in 'foreseeable future'

Dubai skyline. Image courtesy Dubai Media Office Twitter handle.

Dubai skyline. Image courtesy Dubai Media Office Twitter handle.

Mashreq Bank has forecast an improved outlook for the UAE’s leisure travel and tourism industry as more people are getting vaccinated, but it cautioned that challenges will persist for certain segments of the industry. 

“[The] outlook for leisure travel has improved with the rollout of vaccines. Strategic initiatives by the government are helping in strengthening the recovery,” the bank’s latest industry briefing stated. However, the bank said it might take some time for corporate travel to return and that the entire hospitality business will still continue to face “hurdles” this year. 

“While hotel occupancy in the UAE will gradually recover on the back of increased domestic tourism and return of  international travellers, business travel will not return to pre-pandemic levels in the foreseeable future,” said Zain Qureshi, managing director and global head of real estate finance and advisory at Mashreq Bank. 

The bank’s report echoes previous industry analysis that sees the recovery of business travel to lag behind that of leisure travel. Industry sources have said that huge pent-up demand from households will help the travel industry recover once restrictions around the world are eased further.  

One of the key factors to recovery will be consumers’ “excess savings” which, in some markets like the United States and the United Kingdom, have exceeded 10 percent of the gross domestic product, said Brian Pearce, chief economist of the International Air Transport Association (IATA) late last month. Air Arabia CEO Adel Ali also said recently that business travel might take a “little longer” to return. 

Restoring traveller trust 

In its report, Mashreq said traveller sentiment remains cautious in general, so it is critical for the sector to take a phased and coordinated approach to rebuild traveller trust. 

“The primary focus should be on securing consumer confidence in order to bring back footfall. Keeping premises safe and hygiene-controlled need to be prioritized – and businesses must prove that,” the bank said. 

To encourage more people to step outside their homes and book an international flight, the introduction of the so-called “vaccine passports”, as well as digitizing the screening process, can also help. 

“Vaccine passports and digital travel passes are a possible solution to enable cross-border travel,” the report said. 

It is also important that businesses operating within the industry keep their staff and operations “as lean as possible” until things settle down, to ensure their financial stability. 

“Most businesses had to go through a difficult ordeal in 2020, making losses nearly every month. Budgeting in a way that gives them more flexibility and with shorter contracts of up to three months at the most will give them the chance to rebalance things,” said Qureshi. 

Passenger traffic fell by approximately 90 percent during the early stage of the pandemic last year. As of March 2021, international passenger demand was still 87.8 percent down compared to March 2019, according to IATA. Within the Middle East region, airlines saw demand fall by 81.6 percent in March. 

(Writing by Cleofe Maceda; editing by Seban Scaria) 


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© ZAWYA 2021

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