Chronicle of the Middle East and North Africa

Economic Diversification Policy Sees Big Investments in UAE’s Tourism Industry

UAE- Louvre Abu Dhabi Museum
French President Emmanuel Macron (C), his wife Brigitte Macron (L), Moroccan King Mohammed VI (2R) and French CEO of FIMALAC and board member of the American Friends of the Louvre Marc Ladreit de Lacharriere (C-R) visit the Louvre Abu Dhabi Museum during its inauguration on November 8, 2017 on Saadiyat island in the Emirati capital. Photo AFP

The opening of Louvre Abu Dhabi in November 2017 illustrates the United Arab Emirates’ (UAE) policy of economic diversification by expanding its tourism offering and facilitating visits by local, regional and international tourists. Through incentives and new projects, the UAE is set to continue this policy in the years to come.

The World Travel and Tourism Council (WTTC), a global forum bringing together major tourism players, published a report in March 2017 indicating that the UAE’s tourism industry ranks 21 in terms of direct impact on gross domestic product (GDP) with $18.7 billion, compared to the global average of $19.1 billion and the regional average of $6.3 billion. This is equivalent to 5.2 per cent of the total GDP, a figure that is forecast to rise by 5.1 per cent per annum to $31.6 billion in 2027, equivalent to 5.4 per cent of the total GDP.

The same report stated that the sector directly supports 317,500 jobs, or 5.4 per cent of total employment, a number that is also expected to rise to 410,000 jobs (5.9 per cent) by 2027. A further 617,500 jobs are indirectly supported by the industry. Meanwhile, investment in the sector was $7.1 billion, around 7 per cent of the total investments made, and it is expected to reach $20.3 billion in the next 19 years (11.2 per cent).

It is also worth noting that leisure spending generated 77.4 per cent of the travel and tourism contribution to GDP, compared to 22.6 per cent for business spending, and that foreign spending reached 73.4 per cent, dominating domestic spending at 26.1 per cent.

According to WTTC’s Research Director Rochelle Turner, this situation comes “as a result of the Emirates’ visa policy facilitation, increase in the number of flight connections and the development of mega tourism projects”. She added, “Tourism management in the UAE is going on the right path and a continuing increase in the tourism arrivals is expected. Most tourism to the UAE has been concentrated in Dubai and to a lesser extent Abu Dhabi. Now, the other Emirates are actively developing their tourism product offerings, providing visitors with different tourism opportunities in the process. The WTTC benchmarking study shows that [travel and tourism’s] contribution to employment in the region is now larger than financial services, manufacturing and mining, and the sector is growing faster than retail and mining.”

For example, the UAE signed a short-stay visa waiver agreement with the European Union (EU) in May 2015, providing visa-free travel for EU citizens to the UAE and for Emiratis travelling to the EU, for up to 90 days in any 180-day period. The same year, the Minister of Economy Sultan Bin Saeed al-Mansouri said that the tourism sector was an important part of the national economy and a core pillar of the country’s economic diversification policy. He continued: “Practically, the tourism sector is already a well-established aspect of the national economy, with plans to further develop and enhance its role in the coming period, and we will work in coordination and cooperation with various relevant authorities at the local and federal level to provide new ideas and innovative initiatives to strengthen the role of the tourism sector in the economic work system in the state.”

On 23 November 2016, the Ministry of Economy hosted the first Tourism Innovation and Transformation Forum in Dubai, a one-day event designed to present the potential benefits of innovation in the tourism sector to regional stakeholders.

According to Business Monitor International, a research firm, diversity is the key to such a development, with incentives to build mid-range hotels and improve the safety reputation of the Emirates, high standards of accommodation and attractive cultural heritage, adaptation to middle-class travellers from Asia and Africa and short-stay visitors. For example, the 12 top-rated UAE attractions list compiled by the travel and tourism website Planet Ware is at the heart of this newly found diversity. The author listed Dubai’s Burj Khalifa building, Abu Dhabi Sheikh Zayed Mosque, Hajar Mountains, Sharjah Art Museum, Jebel Hafeet peak, Dubai’s old Bastakia Quarter and, of course, beaches and desert, among others. These could fit the needs of adventurous, cultural and luxury tourists, without having to cover large distances.

The most recent attraction, Louvre Abu Dhabi, opened by French architect Jean Nouvel, is the result of a 2007 agreement between the governments of the UAE and France. “Having the Louvre in the list of attractions for a city is highly likely both to attract tourists and to establish itself as a cultural destination,” Turner told Fanack Chronicle. “Art lovers and regional tourists who might not make a trip all the way to France are especially likely to be attracted.” But the museum, considered “spectacular” by some, has also been criticized for lacking innovation while being very political.

Other museums in Abu Dhabi have, however, been delayed and their opening itself is not ensured. Among them is the Guggenheim, which was initially planned to open in 2013, but due to technical difficulties relating to the project and its leadership remains closed. Meanwhile, the British Museum cancelled a deal with the Zayed National Museum in October 2017, two years before the ten-year contract was due to end because work on a partner building had not yet started. These examples show a lack of private organization rather than a lack of involvement from the UAE government.

Another important issue was raised by the international organization Human Rights Watch (HRW), which has been calling on the French and UAE governments to protect the migrant workers who have been working on the site since 2007. “The construction of the Louvre is completed, and many consider the building to be a technical and aesthetic feat,” said HRW France Director Bénédicte Jeannerod in an article published a few days before the opening. “But it has been accomplished at the cost of human suffering in a country whose rulers appear to still widely despise human rights and suppress any critical voice.”

Whether the UAE can continue to develop its tourism sector while respecting human rights is a question that needs to be answered before its international appeal grows even more.

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