Saudi spending habits driving UAE retail revenues

Published September 1st, 2013 - 01:21 GMT
UAE airlines’ expansion in the region has helped boost numbers of Saudi Arabian visitors to the UAE.
UAE airlines’ expansion in the region has helped boost numbers of Saudi Arabian visitors to the UAE.

 Saudi Arabian tourists have played a role in boosting the UAE economy, which is led by trade and tourism.

While the majority of visitors from the kingdom come to Dubai, they also visit other emirates, such as Abu Dhabi and Ras Al Khaimah.

“Saudi Arabia is the biggest market for Dubai in terms of room occupancy,” said Philip Wooller, area director of STR Global for the Middle East and Africa. Last year, Saudi Arabia topped the source markets with 1,128,757 visitors to Dubai. The number was less in Abu Dhabi, with 70,765 visitors, says Wooller.

According to Visa’s latest Tourism Outlook: UAE report, Saudi Arabian visitors spent $420.4 million on their Visa cards in the UAE last year, up 28.8 per cent, taking third spot ahead of the US and China.

Visitors from the gulf state account for between four and ten per cent of hotels’ annual revenues and between four and 14 per cent of retailers’ annual sales, hoteliers and retailers told Gulf News.

“They love to stay in mid-scale four and five star hotels, like Pullman Deira City Centre and Novotel World Trade Centre,” said Olivier Hick, Accor’s vice-president of operations in the Gulf and Levant countries. He added that some stay at economy hotels, such as Ibis.

Saudi visitors account for between five and six per cent of the hotel operator’s annual guests in the UAE, while contributing four per cent of its annual revenue.

Accor has witnessed a 25 per cent growth in guests from the kingdom over the last two years, Hick added.

Hoteliers, too, have expressed growing demand from Saudi Arabian tourists.

“This year, Atlantis, The Palm witnessed an increase of 15 per cent in the number of Saudi tourists who visited the resort with their families and friends during Eid Al Fitr compared to the year 2012. In total Saudi tourists spent more than 20,000 nights at the resort during the first half of 2013,” said Yousif Mukhtar, regional director of sales at Atlantis, The Palm.

While some hoteliers said they expect an increase in business from Saudi visitors in the coming months, Tamer Saleh, director of sales at Four Points by Sheraton said otherwise. He said that business from the market will be stable for his hotel “due to the increase on the number of new hotels in the markets which means that the Saudi travellers will have more options to book their stay during their visit to Dubai.”

Saudi Arabians visit Dubai during the summer holidays, Eid Al Fitr and Eid Al Adha. They also come during the Dubai Shopping Festival (DSF) and Gitex Shopper. Some come during the weekends for short breaks.

Shopping is almost always on the agenda of tourists coming from the kingdom. Retailers have seen strong business from them.

Neelesh Bhatnagar, CEO of consumer electronics retailer Emax said that Saudi Arabian buyers account for “between 4 and 5 per cent” of annual turnover. By next year, he expects the figure to reach between 5.5 and six per cent.

Meanwhile, Daniela Ufken, managing partner at Precious Jewels, a distributor of Philip Stein watches in the UAE, said 35 per cent of customers at its Dubai Mall outlet are Saudi nationals.

“I expect that sales from Saudi customers will go up as Dubai will continue to be a luxury, safe and convenient destination for GCC residents,” she said.

At some of Accor’s hotels, Saudi Arabian guests take advantage of their shuttle bus services which connects them to some of the city’s major shopping malls such as Mall of the Emirates and Dubai Mall, according to Hick.

Saudi Arabians have traditionally travelled to neighbouring Bahrain — a quick drive on the King Fahd Causeway for those living in Al Khobar — but the political unrest in the country has pushed them to seek Gulf states that are a little further away, such as the UAE.

“Dubai is obviously a beneficiary of that,” Bhatnagar said.

The unrest in other Arab countries, such as Syria, Lebanon and Egypt, has made Dubai comparatively safer and therefore attractive to Saudi Arabian travellers.

Connectivity boosts tourist numbers

UAE airlines’ expansion in the region has helped boost numbers of Saudi Arabian visitors to the UAE.

FlyDubai launched a route in Ha’il in February this year. The low-cost airline also serves Riyadh, Jeddah, Abha, Yanbu, Qassim, Dammam, Tabuk and Taif.

Saudi Arabia was among the top five country destinations in terms of passenger volumes at Dubai International in June this year.

Also, during the first half of the year, Saudi Arabia led the source markets in terms of growth, with the number of visitors to Dubai increasing by 31.6 per cent to 710,472, according to data by Dubai Department of Tourism and Commerce Marketing (DTCM).

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