Travel and tourism outlook brightens on vaccine rollout

Building consumer confidence and opening up in a phased manner will be crucial in ensuring the resumption of UAE's tourism sector, says latest briefing from Mashreq Bank

  
  • Business travel will see slow recovery in the short-to-medium term, forecasts Mashreq
  • Rollout of vaccines is improving outlook for leisure travel
  • Strategic initiatives by the UAE government are further helping in strengthening the recovery
  • Building consumer confidence will be key in attracting a greater number of tourists and residents
  • Tourism and hospitality businesses will have to remain agile and keep operations as lean as possible

UAE: The outlook for the UAE’s travel and tourism sector has brightened in the second quarter of 2021, as the positive impact of the country’s strong vaccine programme starts to take effect.

However, challenges continue to persist for certain segments of the industry.

The latest industry briefing from Mashreq Bank highlights how business travel and hospitality businesses will face hurdles for the remainder of 2021 as a result of the Covid-19 pandemic.

“While hotel occupancy in the UAE will gradually recover on the back of increased domestic tourism and the return of international travellers, business travel will not return to pre-pandemic levels in the foreseeable future,” says Zain Qureshi, Managing Director and Global Head of Real Estate Finance and Advisory at Mashreq Bank.

Recent studies have shown that remote-working trends brought about by the pandemic are expected to continue, given the safety and cost-effectiveness of digital conferencing tools. A February 2021 study by market analysts STR highlights that over one-quarter of 1,333 respondents said they were less likely to travel for business once the pandemic was over.  

Improved tourism outlook

The success of the UAE’s vaccine drive as well as strategic initiatives by the government to support local tourism have significantly contributed to improving the outlook for leisure travel.

In order to combat the pandemic, both federal and emirate-level agencies in the UAE have adopted a ‘zero-tolerance’ approach to non-compliance with safety protocols. Penalties have been swift, ranging from warnings to suspension of licenses, ensuring that rules are followed through.

Traveller sentiment remains wary, however, and it is critical for the sector to take a phased and coordinated approach to rebuild traveller trust.

Building confidence

For hospitality and tourism businesses to successfully bring back their customers, achieving operational agility will be critical in the evolving situation.

“It’s about keeping your staff and operations as lean as possible until things stabilise,” emphasises Qureshi.

The primary focus should be on securing consumer confidence in order to bring back footfall. Keeping premises safe and hygiene-controlled need to be prioritised – and businesses must prove that.

The industry briefing further discusses the approach that hotels and restaurants should take in order to not just develop positive consumer sentiment, but to retain it in the coming months.

“It is essentially about improving sentiment, and making customers feel safe, not just in principle but visibly too,” says Qureshi.

Welcoming back visitors

The UAE has continued its strategy of becoming a world-class travel hub, despite the challenges of 2020, indicated by the number of new flight routes and destinations added in the past six months.

“The introduction of new routes not only makes the UAE most relevant as a tourism hub, but also encourages inbound traffic of visitors that may have never made the trip to the UAE otherwise,” explains Qureshi. “Even if it’s just for a stopover or short stay, it still adds value to the local aviation industry.”

However, uneven progress of vaccine programmes across the world is affecting global travel recovery. Vaccine passports are seen as a viable solution to enable smoother cross-border travel.

Qureshi sees Expo 2020 Dubai, which opens to the world on 1 October 2021, being turned into the ‘gold standard’ for large-scale events moving forward. Expo 2020 recently announced that vaccines will be made available to delegates from participating nations.

“As one of the first megaevents to take place since the pandemic began, Expo 2020 could serve as a case study for the way forward,” he says. “Covid-19 and its variant forms will perhaps stay on in the foreseeable future, and the UAE really has a chance to set the benchmark with this global event.”

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