Dubai enjoys a global profile as a major destination for both business and leisure, and today boasts some of the world’s leading offerings in hotels, conference centres, entertainment facilities and shopping malls. It has a beneficial location within close flying distance of some of the world’s most dynamic tourism source markets, and the emirate also remains a popular destination for its neighbours in the Gulf.

At present, however, the sector faces mounting challenges: competition is fierce between the increasing number of hotels and chains, and recent years have seen sustained low oil and gas prices dampen the local and regional economy. Dubai has also widened its appeal to the mass market, which is more price conscious and careful with its spending. For those at the low and middle ends of the sector, this has created a challenging environment. Nevertheless, the period ahead appears optimistic, and Expo 2020 is likely to draw significant crowds. Signs of economic recovery are now easily recognisable, and it appears that the ability to stay strong in tough market environments will result in future rewards.

Structure & Oversight

The Department of Tourism and Commerce Marketing (DTCM) is the emirate’s principal tourism authority. It has a remit to establish Dubai as an indispensable destination for leisure and business travellers alike.

Meanwhile, medical tourism is overseen by the federal Ministry of Health and the Dubai Health Authority. DTCM, which was established in 1997, works with sector stakeholders to create, execute and supervise development plans for the tourism industry’s marketing and promotion approaches.

It is subsequently engaged in a wide variety of promotional and investment-related efforts. These include introducing new brands; raising service standards; developing new attractions; instituting promotions for meetings, incentives, conferences and exhibitions (MICE); and promoting Dubai as a top destination. In 2017 the DCTM ran campaigns in 44 different countries. Currently, the MENA countries, Western Europe and South Asia are Dubai’s largest sources of visitors. However, in efforts to attract greater numbers of tourists from destinations located between four to seven hours’ flying time from the city, as well as from destinations further afield that have notable potential, DTCM and other key sector stakeholders have been pursuing strategies to bring additional markets into the fold.

Relaxed Regulations

The loosening of visa procedures has played a key role in attracting more visitors, and visa-facilitation agreements are considered an essential approach in enticing traffic to Dubai. Thus, for some time the emirate has carried out a visa-on-arrival framework for citizens visiting from certain targeted markets.

According to DTCM, as of August 2018 visitors from 14 of Dubai’s top-20 visiting countries were able to enter the emirate with a form of visa on arrival. Most recently, visitors from China and Russia have benefitted from this arrangement, with the former having had the option since September 2016, and the latter since January 2017. Tourism officials have also been looking for reliable ways to boost visitor numbers from the Americas. This has led to the signing of reciprocal visa-waiver agreements for citizens of Latin American countries and the UAE, in June 2017 and 2018, respectively.

Taking this strategy a step further, in June 2018 the UAE Cabinet approved a decision to exempt transit passengers from all entry fees for the first 48 hours of their stay. A payment of Dh50 ($13.61) may extend this visa for up to 96 hours. The exemption was considered a significant step for the sector and complemented efforts to position the UAE as a desirable stop-over destination.

Also in June, the Dubai Executive Council issued a series of initiatives to stimulate economic growth and reduce the cost of doing business in the emirate. These had numerous positive implications for the hospitality sector, including the reduction of hotel service charges from 10% to 7%.

Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Dubai’s crown prince and chairman of the Dubai Executive Council, explained that the reductions were aimed at enhancing Dubai’s investment and tourism position, and formed part of the government’s efforts to reduce business costs and attract new investment. The 20m-visitor mark is a cornerstone of Tourism Vision 2020, the emirate’s current tourism policy, and should this number be reached, it is anticipated to more than double the number of visitors to the emirate.

DTCM’s scope extends to leveraging solutions and service quality across all tourism dealings. Consequently, it plans to leverage blockchain encryption for the hospitality sector. Known as the Tourism 2.0 initiative, part of the Dubai 10X programme to boost government effectiveness, it will establish a blockchain-enabled marketplace that connects buyers directly to hotels and tour operators. The initiative is scheduled to be implemented by DTCM within two years, and its first phase is planned to involve a distribution channel for hotels, acting as a business-to-business marketplace where hotels and tour operators can connect directly.

Contribution to GDP

Tourism forms a major part of Dubai’s economy, with the sector currently representing around 20% of the emirate’s GDP. Moreover, Dubai makes up 66% of the UAE tourism industry’s contribution to the country’s overall GDP. These numbers are expected to continue rising, with Oxford Economics forecasting that the UAE’s hospitality sector will contribute an additional 72% to GDP by 2026, while hospitality sector employment will grow by 16% to exceed more than 659,000 jobs.

Between 2007 and 2017 the tourism sector’s direct contribution to GDP increased by 138%, and employment in the sector grew by 119%, according to consultancy Knight Frank, which also estimated that the hospitality sector contributed more than Dh150bn ($40.8bn) to GDP and provided almost 570,000 jobs – 4.8% of total employment – in the 10 years leading to 2017.

For its part, market research company Frost & Sullivan estimates that the tourism sector accounts for approximately 6% of employment in the emirate. Expo 2020 is expected to create an estimated 300,000 direct jobs and more than 1m indirect jobs in the UAE as a whole. An increase in the total number of hotels is also anticipated leading up to the Expo, and significant employment growth in the sector is expected to continue.

The hospitality industry in Dubai operates at a 1:1 staff-to-room ratio, and Dubai is projected to gain tens of thousands of additional rooms in the coming years. Employees with management skills will be in demand: according to a KPMG report, managers make up about one-third of hospitality sector staff globally. At the same time, despite the introduction of value-added tax (VAT) in January 2018, business activity in the emirate strengthened during the first month of the year, driven by the travel and tourism, as well as the construction and retail sectors.

According to the Dubai Economy Tracker Index, compiled by the emirate’s largest bank, Emirates NBD, in January 2018 the travel and tourism sector reached its highest level since mid-2017, while employment in the sector increased at its fastest rate since March 2015. In 2017 Dubai’s average spending per overnight visitor was estimated at more than $2000, ranking the emirate number one in this metric compared to other global cities.

Tourism Growth

According to the Dubai Statistics Centre, in the first quarter of 2018 Dubai received 4.65m visitors, with India, Saudi Arabia, the UK and Russia making up its top-five source markets.

In 2017 Dubai welcomed nearly 16m visitors altogether, an increase of 6.2% from 2016, and by 2030 the city is expected to receive between 25m and 30m tourists annually. This growth is fuelled by attractions including the world’s tallest building, Burj Khalifa; the Dubai Mall; the Al Fahidi district and its museum; and the Dubai Creek. Investment in tourist attractions, such as the city’s beachfront district, La Mer; the Dubai Frame; the Etihad Museum; and the city’s first theatrical show, La Perle, also strongly demonstrate the sector’s ongoing development. Projects that are in the planning stage, such as the giant Meydan One Mall, which is scheduled for completion in 2020, and the ongoing Dubai Creek Harbour development are expected to attract increasing numbers of visitors.

Concurrently, theme parks have become features of increasing interest. Dubai Parks and Resorts, which is a 25m-sq-foot leisure destination, includes LEGOLAND Dubai, Motiongate Dubai and Bollywood Parks, among a vast number of other notable attractions. In 2016 IMG Worlds of Adventure also launched its operations, with approximately 1.5m sq feet of themed entertainment facilities.

Preparations for Expo 2020 are unfolding across the emirate, and especially close attention is being paid to the hospitality and construction sectors. The expo is expected to be a major catalyst for growth of tourism companies, with the industry aiming to introduce the region to higher numbers of first-time visitors, while also encouraging long-haul travellers to break up their journeys with visits to the emirate.


Dubai is one of the world’s top-20 business destinations, with its meetings, incentives, conference and exhibitions (MICE) segment generating $653m per year, according to Frost & Sullivan. The segment is forecast to grow at a rate of 7% a year by 2020, when its value is anticipated to exceed upwards of roughly $1.39bn.

The UAE Cabinet also contributed to 2018 growth, making a decision in May to refund VAT to the MICE industry. The VAT refund will go largely towards marketing, and attracting foreign companies and business tourists to future MICE events held in the country. These events have been growing in number. Some 3.3m people visited the DWTC in that year, an increase of 9%, including more than 1.1m foreign business travellers. In 2018 the centre hosted around 133 exhibitions in addition to other MICE events, including some of the region’s largest expos. Dubai hosted 212 international business events in 2017, an increase of 64% from the previous year, and a new record for the city.

The events themselves attracted about 95,000 participants and generated approximately $194m in revenue. In 2017 the Dubai World Trade Centre (DWTC) alone hosted 353 MICE events, an increase of 18% year-on-year, with the total number of annual exhibitors growing by 10% to 39,200.


The emirate’s hotel sector had a robust performance in 2017, with occupancy levels among the highest in the world (78%) and averaging healthy daily rates of $134. According to a report on the sector by accounting firm EY, Dubai’s approximately 700 hotels and hotel apartments registered the highest revenue per available room (REVPAR) in MENA, at $189 in 2017, followed by Jeddah at $170. Although strong, Dubai’s REVPAR represented a 6.2% decrease on a year-on-year basis. In conjunction with this, average room rates in Dubai fell by 4.4% in 2017, to $243, as occupancy rates fell 1.4 percentage points. The decline was attributed to the increased supply of rooms in the lead-up to Expo 2020. In comparison, Makkah, in Saudi Arabia, had the region’s highest room rates in 2017, averaging a daily rate of $300.

At the end of March 2018 the hotel room inventory was 108,800, with DCTM forecasting that by the end of 2019, hotel room supply will reach 132,000. DTCM expects the hospitality sector to continue sustained growth in the coming years, with occupied room nights set to reach 35.5m annually in 2019. In the first quarter of 2018 Dubai enjoyed the highest hotel occupancy rate in the MENA market, at 86.9%, according to an EY report. The average room rate throughout the quarter was $293, and REVPAR was maintained at approximately $255.

In terms of market segments, luxury hotels comprise about one-third of Dubai’s total hotel inventory. As of the first half of 2018 the city had 107 five-star hotels, with around 50 more in the planning and construction pipeline and set to open before 2020. The five-star market remains strong and stable, and high-end hotels were seeing average occupancy rates of 77% as of mid-June 2018.

A transition from mainly five-star luxury hotels to a wider range of accommodation is in process, with the goal of providing affordable options to a wider range of visitors. With nearly 75,000 one- to threestar rooms and serviced apartments, this segment made up 67% of room supply as of June 2018, double the five-star segment’s share. Occupancy of one to three-star hotels and hotel apartments stood at 89% in January 2018. This diversification across hotel assets is largely a result of DTCM’s focus on developing the mid-market hotel segment. DCTM’s CEO, Issam Kazem, has stated that the number of three-and four-star hotels will continue to increase significantly over the next several years.

“We have put incentives in place, with municipality fees, that encourage investment towards that sector,” Kazem told local media. “We knew that if we were going for a diversified market approach, there would be a demand not just for the five-star segment. We have a healthy number [of three- and four-star] hotels in the pipeline,” he said. The emirate is home to the Middle East’s largest construction pipeline, and per a 2017 report from data analytics company STR Global, there were 29,226 hotel rooms and 95 projects in various stages of planning.

On Display

The widening range of establishments was starting to become evident in early 2018, when Dubai become home not only to the Gevora hotel, the world’s tallest hotel, but also to Zabeel House, Jumeirah’s first upscale-casual hotel, which has nightly rates starting at Dh495 ($135).

A Mandarin Oriental, Caesars Palace on Bluewaters Island, a second W at The Palm, the Grand Millennium at Business Bay, the Emerald Palace Kempinski on The Palm, the Stella di Mare at Dubai Marina, and a Time Asma in Barsha Heights are also slated to open in 2018-19. The Time Asma will be a four-star hotel operated by 80% female staff and will feature dedicated facilities for female travellers.

A DTCM study of Dubai’s hotel market forecast a 10.2% compound annual growth rate in occupied room nights from 2018 to 2020. Despite such significant growth in capacity, however, occupancy levels are expected to remain between 76% and 78% if international overnight visitor numbers increase in hand with changing supply.

Recent years have also seen the arrival or Airbnb in Dubai, after the necessary regulations were established. In 2018 this segment expanded even further with the arrival of airDXB, the first Airbnb management company to operate in the emirate.

Source Markets

The mix of visitors to Dubai is becoming more varied. While India, Saudi Arabia, the UK and Oman are still the main countries of origin for visitors, these are increasingly being joined by travellers from Russia, China, South-east Asia, Latin America and sub-Saharan Africa.

Over 16m tourists visited Dubai in 2017 and overnight visits totalled 15.8m, a figure 6.2% higher than in 2016. The top-three source markets remained stable: India, with 2.1m visitors, was in first place, a ranking boosted by the recent implementation of a 14-day visa-on-arrival arrangement for people who have a valid US or Schengen visa. It was the first country to reach the 2m-visitor mark in a single year, reflecting a 15% year-on-year increase. Projects such as Dubai Tourism’s #BeMyGuest social media campaign, made in collaboration with Bollywood superstar Shah Rukh Khan, likely contributed to the higher numbers. Saudi Arabia, with 1.53m visitors, and the UK, with 1.27m, are also traditional leaders in this area, and are the second- and third-largest source markets, respectively. However, declines were seen from both countries in 2017, with Saudi Arabia down 1% to 434,000 arrivals, and the UK down 8% to 323,000 visitors.

The start of a significant shift in markets is perceptible, however, epitomised by the notable increase in visitors from Russia and China. There were some 4.65m international visitors to the emirate in the first quarter of 2018, a figure which represents a roughly 2% increase over 2017. Russia was Dubai’s fourth-largest source market, with 259,000 visitors over that quarter, representing a healthy 106% year-on-year expansion. DTCM attributes this increase to the well-received introduction of visas on arrival for Russian citizens. Arrivals from China have also been rising, with the number of visitors up 41% in 2017 alone to around 764,000.

These trends continued throughout the first half of 2018. China posted a 9% increase in visitors from January 2017 to June 2018, while tourists coming from Russia increased by approximately 74%.

During the first quarter of 2018 travellers from Western Europe comprised 23% of all overnight visitors, while South Asia and the rest of the GCC made up 17% each. The wider MENA region accounted for 11%; North and South-east Asia 10%; and Russia, Eastern Europe and the CIS 10%. Factors including the general relaxation of visa requirements, coordinated promotions and overall growth in source markets’ domestic airlines have all played major parts in driving these increases.

Indeed, the growing number of Chinese tourists is a clear example of the first of these factors. After the UAE introduced visas on arrival for Chinese tourists in September 2016, passenger traffic from China through Dubai Airports surged by 19.4%, reaching 2.2m. In 2017 inbound overnight Chinese visitors – people travelling through Dubai who decide to stay a night in the emirate – had also jumped up 41.4%.

In the first five months of 2018 a record 400,500 Chinese visitors stopped overnight in the city. July 2018 was the airport’s busiest month ever for Chinese visitors and overall numbers. Chinese visitors now account for 4% of total traffic and 15% of sales at Dubai Airports, making China Dubai’s fastest-growing source market.

Likewise, the number of visitors arriving from Russia rose to 1.3m, an increase of 28%, after visa requirements were slightly relaxed in January 2017.


Coordinated promotions have played an important role in the growth of arrivals from China. One promotional campaign from Tencent China offers mobile payment systems for Chinese tourists at Dubai retail outlets, and merchants are being urged to use the Tencent Cloud to increase the volume of expenditure made by Chinese visitors.

Another promotion, by Chinese telecoms giant Huawei, has all Huawei devices pre-loaded with informational content about Dubai, in particular travel apps. This promotion is expected to reach a significant portion of the approximately 980m active WeChat and Weixin monthly users.

The continued rollout of AliPay and UnionPay in Dubai should also drive spending by this source market, with 91% of Chinese tourists reportedly more willing to shop overseas with merchants that accept Chinese mobile payment platforms.

Other promotions targeting leisure travellers – a segment that comprised the majority (73.8%) of tourists in 2017 – include Dubai Tourism’s Dubai Pass discount pack and a campaign to promote the Al Marmoum desert region, an area popular for cycling and the location of the emirate’s camel races.

Medical Tourism

Medical tourism is quickly becoming a important sector for Dubai’s economy, and the segment is anticipated to grow by 13% between 2018 and 2023, and it is expected to bring in more than Dh2.6bn ($707.7m) in revenue by 2029.

Since 2014, 630,800 medical tourists have visited Dubai’s 26 hospitals, and the emirate aims to attract 500,000 per year by 2020. Revenue generated from international patients was worth over Dh1bn ($272.2m) as of late 2016. In that same year 326,600 international medical tourists visited Dubai, of which 37% were from Asia, 31% from the GCC, 15% from Europe and 17% from other countries.

Dubai ranked 16th globally and first in the GCC region on the 2016 Medical Tourism Index. It reflected notably high scores for its quality of facilities and services, medical tourism industry infrastructure and destination environment.

Many medical tourists receive care in the facilities at Dubai Healthcare City (DHCC). DHCC, which launched in 2006, is a dedicated free zone incorporating a medical community. Those who have their clinic, hospital or other heath care facility within the zone are entitled to a range of benefits including tax exemptions, repatriation of profits, and one-stopshop assistance with visas, licences and a range of other administrative requirements.

A second health care free trade zone, phase 2 of DHCC, is also now under development. This will focus on wellness and preventive care, occupying 3.3m-sq-feet along Dubai Creek. It will also include two key projects: the Swiss International Scientific School Dubai and the Marriott Hotel Al Jaddaf. In addition, medical tourists are able to browse a range of medical specialties and services on the Ministry of Health’s health tourism website, Dubai Health Experience, which compiles information on health, travel, hospitality and visa services in the emirate.

Culture & Cruises

Although Dubai has a long-established profile as a modern, advanced city, efforts are also being made to promote the emirate’s history. The Shindagha Heritage District project is under way to renovate one of the emirate’s oldest neighbourhoods, aiming to build on the success of the Al Fahidi Historical District. This project is being dedicated to trade, crafts and the pearling industry, and will have up to 23 secondary museums. It is hoped that the district will help boost cultural tourism to 12m visitors by 2020.

Another area seeing growth is cruise tourism, with Dubai welcoming 650,000 cruise passengers during the 2017 season. These numbers are expected to increase to 1m by 2020, with the maritime tourism sector anticipated to contribute more than Dh1.5bn ($408.3m) to the economy by 2030.

Expansion works at DP World’s Dubai Cruise Terminal at Mina Rashid will likely make a major contribution to this growth. The terminal is the emirate’s main cruise centre, and welcomed some 625,000 holidaymakers in 2016/17 – about twice the number that was recorded throughout the 2013/14 season.

A major expansion of Mina Rashid’s Hamdan bin Mohammed Cruise Terminal, T3, is under way at the port. When completed, it will make the terminal the largest of its kind in the world, capable of handling upwards of 18,000 passengers a day.

Dubai is also working with cruise company Carnival to realise the emirate’s plan of becoming a global cruise tourism hub, with Dubai Cruise Terminal set to become Carnival’s primary centre for its home-porting and transit operations in the region. Plans for the first phase of the expansion include the construction of two cruise terminal buildings, spanning a total of 30,000 sq metres, joined by a 1-km quay with the capacity to accommodate three cruise ships and 13,200 passengers at once.

Future plans include adding two more terminal buildings to increase capacity to six cruise ships at once. Dubai Harbour, meanwhile, is planned to become home to the largest yacht marina in MENA, with around 1100 berths capable of accommodating yachts of up to 150 metres.


The T3 expansion is just one of the major improvements to tourism infrastructure that is currently under way. From airports and lowcost airlines, to improved domestic inter-city roads and railways, ongoing transport developments are expected to keep the UAE and Dubai among the most competitive destinations in the region.

In terms of international traffic, Dubai International Airport (DXB) rates as the world’s busiest airport, welcoming more than 88m passengers in 2017. Officials estimate that the airport will soon reach the milestone of having served 1bn total passengers and tourism officials have set a target of serving 100m passengers by 2020.

The success of Emirates Airlines has also been key to DXB’s success. Emirates now flies to more than 150 destinations on six continents, using a large fleet of 269 wide-body aircraft. At the same time, Al Maktoum International Airport (DWC), located south of DXB at Jebel Ali, has capacity for 120m passengers annually. This is being expanded in order to accommodate 160m passengers by 2025. DWC is being prepared for launch as a multi-modal superport, with the addition of space port facilities. The idea is that it will become the world’s first integrated air and space transportation hub.

Outside of air travel, a hyperloop train system could transform how tourists and residents alike move throughout the UAE. Though there is currently no timeline for its completion, the proposed hyperloop could reduce travel times between Abu Dhabi and Dubai by up to 78 minutes altogether. Two companies are involved in its development: Virgin Hyperloop One, backed by Dubai-based DP World, and Californian Hyperloop Transportation Technologies – with the former opening an office in the emirate in September 2018.


Dubai’s hospitality sector is maturing, and despite signs of a risk of hotel oversupply both before and after Expo 2020, there is large potential for future growth. This is evident in the variety of offerings the sector is able to make, and in the rising investment being made in the emirate’s hospitality industry, both of which are expected to continue. For many hotel owners, however, increasing costs are the biggest challenge, especially at a time when high supply and blossoming competition are consistently driving down room rates.

Consolidation is also likely to be a significant factor in the period ahead, as those entities with the most financial freedom continue to work on strengthening their hold on market share.

Simultaneously, a return to stronger economic growth both internationally and in the emirate may eventually result in a higher level of buoyancy in the market. It is anticipated that China and Russia will keep steadily increasing their market shares, with this reflected in higher overall numbers but also in the gradual reduction of average expenditure.