UAE retail look to local consumers as Chinese and Russian tourists drop

Published August 19th, 2015 - 07:46 GMT

Spending by Russian and Chinese tourists traveling to the UAE has declined recently and it is hurting not just the luxury shops in Dubai’s sprawling malls but other businesses as well.

Nasir Mansoor, who manages vehicle rental service company Fast Rent A Car in Dubai, said that this year has been very challenging for them because the number of customers from the two countries has dropped significantly.

During the peak period, around seven or ten Fast cars would be taken out for a drive by Russian tourists, while Chinese visitors would fill ten tourist buses a week. These days, the rental company is able to rent out, on average, only one car to a Russian customer, while Chinese tourists have dropped to two busloads a week.

“The Russian tourists play a vital role in [our] car rental [business]. In the past six months, we have seen a noticeable decline in Russian customers who would benefit mostly from our daily and weekly rental services,” Mansoor told Gulf News.

“Chinese tourists used to bring in business of up to ten bus tours weekly, while today, that number would approximately stand at around two tour trips,” he added.

The national currency in Russia has been showing its weakness since last year, losing half of its value against the US dollar. The decline has made traveling abroad more expensive for Russians who earn in roubles. At the same time, the economic slowdown in China, coupled with the recent devaluation of the yuan, is not playing well with outbound tourism.

According to Network International, overall credit or debit card spending by Russian and Chinese shoppers in the UAE dropped by 30 per cent and 22 per cent, respectively, during Ramadan compared to the same period last year. Jones Lang LaSalle noted in its latest report that retail sales in the UAE have slowed down, particularly in the luxury segment, as tourist spending from Russia has declined.

More visitors are still traveling to the UAE, but arrivals from Russia and the Commonwealth of Independent States (CIS) has been weak. The number of Russian passengers arriving in Dubai dropped by 31.7 per cent in March, while those entering via Abu Dhabi declined by 10 per cent in June.

Dubai Airports attributed the downtrend to the “continuing economic and social concerns in the region, with most major cities including Moscow, Kiev and St Petersburg recording fewer passengers.”

“[This is] due to the factor that the rouble’s value has gone down in Russia and there is an economic downturn in China due to export slowdown,” noted Karan Patel, marketing manager for Middle East at 2GIS UAE, a map service comprising detailed business listings and public transport guide.

The app developer provides map downloads to visitors in the UAE and used to attract huge customer traffic from Russian and Chinese travelers. Recently, however,  “application downloads” are on a decline, owing to the slump in tourist numbers.

Russian and Chinese foot traffic is also declining at Shoexpress shops in the UAE. Jithan Harichand, the company's retail operations manager, said that, given the rising cost of living in the UAE, domestic spending isn't enough to make up for the drop in tourist spending.

"The past year has been tough economically across the Middle East, Europe, especially Russia and China, thus tourism [has slowed down]. Tourists tend to spend cash in value retailers, thus with the [downtrend], we are dependent on UAE residents," said Harichand.

"[But] with inflation in UAE, residents have limited disposable income to spend locally."

Anuraag Sinha, managing director of Liali Jewellery in Dubai, said they used to get a lot of business from Russian tourists,  but with the decline in visitor numbers,  sales at their outlets in premium locations have slowed down.

“The actual drop in the sales value in our sector is high because the tourists that have replaced some of the Russian and other high-spending tourists are not spending as much as the Russians did,” Sinha said.

“While our stores in certain five and seven-star locations and resorts have suffered, our overall sales have grown as our main focus has been on brand building.”

By Cleofe Maceda


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