While cruise tourism is a relatively new market in Dubai – the government has promoted the segment only since 2001 – over the course of the past decade the emirate has become one of the region’s busiest stop-offs for cruise liners from around the world. In 2011 the cruise terminal at Dubai’s Port Rashid welcomed 108 cruise ships, up from 103 ships in 2010 and just 87 ships in 2009, according to data from the Department of Tourism and Commerce Marketing (DTCM), the emirate’s tourism authority. According to government projections, the port is expected to welcome as many as 145 ships on an annual basis by 2015. With this figure in mind, in the coming years Dubai is widely expected to become the primary Middle Eastern hub for the global cruise industry.
POTENTIAL SETBACKS: While the outlook is broadly positive, the emirate’s burgeoning cruise segment is currently faced with a number of challenges. Dubai confronts competition from a handful of other rapidly expanding cruise markets on the Arabian Peninsula, including Oman, Qatar, Abu Dhabi and Bahrain, all of which have announced major investments in cruise-related infrastructure in recent years. Growth in the industry has also been hampered by low demand for cruises among the local Emirati population. Finally, while a number of GCC countries are in the process of expanding their cruise capacities, the regional business as a whole has suffered due to the fairly limited number of ports throughout the Middle East.
In Dubai both the government and private sector players are working to address these issues. The DTCM and operators from the private sector have both launched marketing campaigns in an effort to stoke demand for cruise holidays among the local population, for example. The emirate’s longstanding reputation as a major tourist destination in the region gives it a significant advantage on many of its regional competitors in the cruise segment. Consequently, the cruise industry is expected to play an increasingly important role in Dubai’s tourism industry at large in the coming years.
BY THE NUMBERS: The annual cruise season in Dubai runs from around the third week in October through June, though the emirate generally receives a few ships during other times of year as well. In 2011 some 396,500 passengers visited Dubai on 108 cruise ships. This is only a slight jump on 2010, when 103 ships and 390,255 passengers visited the emirate, though it is a major increase from previous years – in 2009 Dubai welcomed around 263,000 passengers on 100 ships, up from some 182,000 passengers on 82 ships in 2008, 114,000 passengers on around 52 ships in 2007 and just 32,000 passengers on around 30 ships in 2006, according to DTCM figures. The government has estimated that in 2012 around 110 ships carrying 420,000 cruise passengers will dock at Port Rashid. This figure is expected to rise to 125 ships and more than 450,000 passengers in 2013, 135 ships and 475,000 in 2014 and 145 ships and more than 500,0000 passengers by 2015.
MAJOR PLAYERS: The government has played a central role in the expansion of the cruise segment. The DTCM, which was formed in 1997 to replace the Dubai Commerce and Tourism Promotion Board, was instrumental in the construction of Dubai’s first temporary cruise terminal at Port Rashid in 2001. As “the principal authority for the planning, supervision and development of the tourism sector in Dubai”, the DTCM has a mandate to oversee and manage the expansion of the sector at home. The department was also responsible for designing and building the current cruise terminal at Port Rashid, for example, which opened its doors in February 2010 and is widely credited with boosting Dubai’s reputation as a centre for the cruise industry. Since the construction of the new terminal, the cruise segment has been a key component of the DTCM’s marketing efforts around the world.
As of late 2012 Dubai served as home port in the Middle East for five major cruise companies, including Costa Cruises, AIDA Cruises, Royal Caribbean International, TUI Cruises and FTI Cruises. Costa, one of the largest travel companies in Italy and among the largest cruise operators in Europe, was the first cruise firm to use Dubai as a home base for regional cruises in 2006-07, when it completed 44,000 passenger trips in the emirate. AIDA, a German affiliate of Costa, launched services out of Dubai around the same period. The Norwegian-US operator Royal Caribbean followed suit in late 2009, offering a week long itinerary with stops in Fujairah, Muscat and Abu Dhabi. The German operator TUI launched a Dubai-based itinerary in November 2012, with stops in Abu Dhabi, Muscat and Bahrain. FTI, another major German cruise company, also launched a new Gulf itinerary in late 2012, with stops in Muscat and Fujairah. In addition to these five operators, which have chosen to base their regional itineraries out of Dubai, the emirate serves as a port of call on international routes offered by more than 20 other cruise operators, including MSC Cruises, Cunard Cruise Lines, Carnival Cruise Lines, Princess Cruises and Norwegian Cruise Lines, among others.
GROWTH DRIVERS: The opening of the Dubai Cruise Terminal (DCT) at Port Rashid in February 2010 was a milestone for Dubai’s cruise segment. The previous terminal, which had been in use since 2001, consisted of a series of low-rise, flat-pack temporary structures and had space for two ships to dock simultaneously. The DCT, meanwhile, can handle up to five ships simultaneously. The new terminal includes double the space for passenger arrivals and almost twice the baggage handling capacity of the previous building.
Additionally, the DCT boasts a wide variety of passenger amenities and services, including money exchange points, a post office, a number of shops and cafes, a business centre, tour operator outlets, free wireless internet and DTCM information counters. In early 2012 the department announced plans to expand the capacity of the DCT from five to seven ships over the course of 2012 and early 2013.
Dubai is well positioned to serve as a regional hub for cruise operators. The emirate’s location between Europe, the Middle East, western Asia and the subcontinent means that it is within easy reach of more than one-third of the world’s total population, including India, which is home to a rapidly rising tourism expenditure among the burgeoning middle class. Dubai’s climate is also an asset – the emirate’s cruise season begins just as the European season ends. Finally, Dubai has high-quality transport infrastructure, a wide variety of hotels and other lodging options at all price points (see analysis) and many tourist attractions, all of which contribute to making it an ideal jumping-off point for regional cruise operators. Since early 2011 the emirate has benefitted from the demonstrations that have swept through many other countries in the region. Some cruise operators have cancelled stops in Bahrain, for example, in favour of Dubai, which offers political stability and a tourist-friendly environment and local population (see analysis).
NEW MARKETS: In an effort to encourage continued expansion in the cruise industry for the foreseeable future, the DTCM has targeted a number of key potential growth markets in recent years, including GCC countries, Russia, India and China. In September 2012 the department carried out a series of cruise-focused promotional workshops in seven cities throughout the GCC region, in conjunction with Italy’s Costa Cruises and the US-based Royal Caribbean International. The road show aimed to introduce the cruise segment to tourism operators throughout the Gulf region, largely in order to drum up new business from Gulf nationals for Dubai-based cruise companies. According to local media reports, travellers from the Middle East generally prefer to book cruises in Europe and the Caribbean.
In addition to GCC countries, the DTCM is working to attract new business from a number of other major tourism markets. Visitors from CIS countries, and especially Russia, have accounted for a steadily increasing percentage of incoming tourists in recent years, for example. Similarly, steadily rising per capita income in both India and China have resulted in a newly mobile middle class in the world’s most populous countries. The DTCM, which operates tourism offices in Russia, India and China, among other places, has worked to promote Dubai’s cruise segment alongside the emirate’s numerous other attractions in these markets. The government is also in the process of developing a new visa regime, which is expected to make it much easier for visitors from many countries to enter Dubai.
CHALLENGES: While the long-term forecast for the local cruise market is generally positive, operators and the DTCM face a number of challenges. The EU debt crisis, for example, has had a negative impact on the number of visitors coming from European countries, so much so that in late September 2012 Royal Caribbean announced that the 2012-13 season would be the company’s last in Dubai. According to local press reports, the firm’s Gulf offerings have suffered from low demand due to the financial situation in the EU and the ongoing political strife in the Middle East. Despite these unexpected challenges, the emirate’s cruise market is still expected to flourish in coming years, and may take advantage of current issues to expand in new ways.
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