UAE tourism outlook: Demand for domestic experiences to grow more than ever

However, market players need to rethink their strategy to capitalise on local demand

Visitors watch the water show in the Dubai Fountain in front of The Address Burj Dubai Lake Hotel.

Visitors watch the water show in the Dubai Fountain in front of The Address Burj Dubai Lake Hotel.

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The growth in domestic tourism in the UAE has risen due to COVID-19 restrictions on international travel and is set to accelerate further in the coming years, according to the CBRE Group.

In its latest report, the firm also said that players in the hospitality market, including property developers, need to rethink their strategy in order to encourage more residents to explore local attractions and enjoy accommodation closer to home.

International travel was brought to a standstill in March when governments around the world shut their borders to curb the spread of coronavirus. Even after the global lockdown eased, air travel continued to be hugely depressed.

Bruno Trenchard, senior manager in the CBRE hospitality and leisure division noted that, as a result of the pandemic, people have been encouraged to explore local offerings instead of going abroad.

“After several years of a relatively modest increase in demand, domestic tourism in the UAE has really picked up pace as a result of the COVID-19 pandemic. This growth is expected to accelerate in the coming years due to previously existing underlying market trends and market maturation,” he said.

Currently, Dubai attracts nearly half (44 percent) of the tourism demand from UAE nationals, he noted. “Abu Dhabi benefits from its status as the country’s capital city to attract 32 percent of UAE nationals and the northern emirates represent a smaller share of demand relying mostly on the sun and sea offering,” he added.

According to the United Nations World Tourism Organisation (UNWTO), domestic tourism is more than six times bigger than international tourism, so those who have huge local markets are expected to emerge faster from the impact of the pandemic.

“With travellers considering destinations closer to home in the early stage of travel normalisation and with still important travel restrictions in place for international travel as a consequence of COVID-19, countries with higher shares of domestic tourism are likely to recover earlier and faster,” the UNWTO said in a report.

In 2018, an estimated nine billion domestic overnight visitors were recorded around the world, of which more than 50 percent were in Asia and the Pacific.

Change in strategy

As the domestic tourism market expands, CBRE said hotels and other types of tourism accommodations are expected to see an increase in demand. However, it said “there needs to be a change in investor’s approach to ensure that newly developed properties are properly designed and positioned to capture” the local market.

For one, CBRE noted, the resort offering in the country is currently focused on the five-star segment, with most properties targeting the upper-upscale and luxury guests. This, CBRE noted, implies a relatively high and selective price point.

In order to boost domestic demand, CBRE said, developers should adapt their projects to a different type of market, as well as pursue new opportunities.

“Domestic tourism is a major driver of tourism globally. However, despite demand already existing, the UAE is lacking the dynamism and level of demand of its international peers. There has been growth in the sector in the last few years and the market has potential,” said CBRE.

“However, support is also required from the government to help develop new tourist attractions. Investors will need to slightly change their approach to development projects to ensure that their hotels have the necessary characteristics to attract domestic demand, and that they are positioned in one of the numerous segments (glamping, midscale resorts, etc.) where opportunities can be identified,” CBRE added.

In-depth experience

Besides, diversifying their property offerings, players in the industry would also do well if they introduce a wide range of activities that are designed to provide “in-depth experience” for local visitors. These activities can be organised by the hotel operators themselves or by third parties.

Promotions like the so-called “daycations”, which allow customers to use a hotel room for the day, as well as staycations, which offer overnight stays or a few nights at a local hotel to local residents, can boost domestic demand.

To further entice the populace to explore local attractions, CBRE said there may be a need to introduce changes to local rules, especially around overnight stays in outdoor locations.

“Some amendments in legislation, such as the recent changes announced by Department of Tourism and Commerce Marketing (DTCM) on overnight stays at desert camps will be beneficial to support more diversity in the offering,” CBRE said.

(Reporting by Cleofe Maceda; editing by Seban Scaria) 

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