A study of opportunities and threats emerging from the current and likely future tourism development in Dubai

I TABLE OF CONTENTS

ABSTRACT

1 INTRODUCTION
1.2 PURPOSE OF THESTUDY
1.3 COUNTRYOVERVIEW

2 LITERATURE REVIEW
2.1 THEORIES ON THE TOURISM INDUSTRY
2.1.1 TOURISM PLANNING, DEVELOPMENT AND MANAGEMENT
2.1.2 THE TALC-MODEL
2.2 IMPACTS OFTOURISM
2.3 THECONCEPT OFSUSTAINABILITY
2.3.1 SUSTAINABLE TOURISM DEVELOPMENT
2.4 SWOT ANALYSIS

3 METHODOLOGY
3.1WHAT ISRESEARCH?
3.2 RESEARCHFAMILIES
3.2.1 SECONDARY DATA
3.2.2 PRIMARY DATA
3.3 RESEARCH TECHNIQUES
3.3.1 INTERVIEW
3.3.2 QUESTIONNAIRES
3.4 KEYCONCEPTS
3.4.1 VALIDITY
3.4.2 RELIABILITY
3.4.3 GENERALIZATION
3.4.4 TRIANGULATION
3.5 ETHICAL ISSUES

4 RESEARCH FINDINGS
4.1 ANALYSIS OFTOURISMDEVELOPMENT INDUBAI
4.1.1 TOURISM PLANNING IN DUBAI ACCORDING TO COOPER’S FRAMEWORK
4.1.1.1 Tourism Policy
4.1.1.2 Marketing Strategy
4.1.1.3 Taxation Structure
4.1.1.4 Infrastructure Developments
4.1.1.5 Education and Training
4.2 THETOURISMPRODUCT INDUBAI
4.2.1 TYPES OF TOURISM
4.2.2 VISITOR PROFILES
4.2.3 CURRENT PROJECTS
4.3 APPLICATION OF THETALCMODEL TODUBAI
4.4 IMPACTS OF THETOURISMINDUSTRY INDUBAI
4.4.1 ECONOMIC IMPACTS
4.4.2 SOCIOCULTURAL IMPACTS
4.4.3 ENVIRONMENTAL IMPACTS
4.5 SUSTAINABLE TOURISM DEVELOPMENT
4.5.1 THE NEED FOR SUSTAINABLE TOURISM DEVELOPMENT IN DUBAI
4.5.2 APPROACHES TOWARDS SUSTAINABILITY IN DUBAI
4.5.2.1 The Al Maha Desert Resort
4.5.2.2 Environmental Master Plan
4.6 PRIMARYDATAANALYSIS
4.7 SWOT-ANALYSIS

5 CONCLUSION AND RECOMMENDATIONS
5.1 EXAMINE THE KEY CHARACTERISTICS OF CURRENT AND LIKELY FUTURE TOURISM DEVELOPMENT INDUBAI
5.2 ASSESS THE POTENTIAL OFDUBAI AS A TOURIST DESTINATION WITH PARTICULAR REFERENCE TOSWOTANALYSIS
5.3 ANALYSE POSSIBLE THREATS TO TOURISM DEVELOPMENT INDUBAI
5.4 ASSESS THE IMPORTANCE OF SUSTAINABLE TOURISM DEVELOPMENT INDUBAI53
5.5 FORMULATE RECOMMENDATIONS AS TO HOW FURTHER TOURISM DEVELOPMENT INDUBAI CAN BE REALISED

II TABLE OF FIGURES

III GLOSSARY

IV BIBLIOGRAPHY

V TABLE OF APPENDICES

II TABLE OF FIGURES

FIGURE 1.1: RECENT TREND AND OUTLOOK FOR GDP GROWTH IN THE UAE IN %

FIGURE 1.2: DUBAI’S SECTORAL STRENGHTS IN LIGHT OF GLOBAL FUTURE GROWTH

FIGURE 2.1: TALC-MODEL BY BUTLER.

FIGURE 2.2: ADOVACY AND CAUTIONARY PLATFORM

FIGURE 2.3: SWOT MATRIX

FIGURE 4.1: TOURISM-RELEVANT NUMBERS

FIGURE 4.2: INCENTIVE TRAVEL DESTINATIONS 2000 - 2001

FIGURE 4.3: HOTEL GUESTS BY NATIONALITY 2007

FIGURE 4.4: DRAFT OF CURRENT PROJECTS IN DUBAI

FIGURE 4.5: INTERNATIONAL VISITOR ARRIVALS IN THE UAE

FIGURE 4.6: ECONOMIC BENEFITS AND COSTS

FIGURE 4.7: TRAVEL & TOURISM CONTRIBUTION TO UAE’S ECONOMY

FIGURE 4.8: ENVIRONMENTAL IMPACTS ALONG THE VALUE CHAIN

FIGURE 4.9: TCCI SCORE VS. ENVIRONMENTAL SUSTAINABILITY

FIGURE 4.10: POSITIVE AND NEGATIVE IMPACTS OF TOURISM DEVELOPMENT IN DUBAI

FIGURE 4.11: DUBAI SWOT-ANALYSIS

III GLOSSARY

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ABSTRACT

This research project assesses the current and likely future tourism development in Dubai. Particular reference was given to the concept of sustainable tourism development. It was to be answered, whether the current scale of tourism development in Dubai is likely to be sustainable. In order to answer this question, the author has used several frameworks for assessing Dubai’s current scale of tourism development and its strengths and weaknesses as a tourist destination. Moreover the concept of sustainability has been introduced in this project. The importance of sustainable tourism development in Dubai had to be assessed; hence, the author demonstrated a choice of Dubai’s approaches towards sustainability. Finally recommendations are given of how to further tourism development in Dubai should be realised.

The research findings show that Dubai’s strategic tourism development is focused on quantity rather on quality. 20 years ago, Dubai consisted mainly of desert, today countless hotels, theme parks, and even artificial islands are being built to meet the current demand and to attract more tourists. Such a rapid development is not without criticism in terms of major negative sociocultural and environmental impacts. This piece of work highlights these impacts and points out whether they can be overcome or not.

1 INTRODUCTION

1.2 Purpose of the Study

“In the words of Donald Trump Junior of Trump International Hotels, ’It is an incredible place. What they are doing is amazing. They are limited purely by their imagination and the law of physics.’”

(Oxford Business Group, 2007, p.173)

Within 30 years Dubai developed from a small fishing country to the fastest growing tourist destination in the world. Even as recently as 10 years ago, Dubai boasted just two resort hotels. It began as one of the least resource-rich states in the Arabian Gulf - today it is seen to become the new economic and cultural capital of the world (Zacks, 2007).

The confidence in what Dubai has to offer as a destination is backed up by the development of some of the most impressive tourism projects in the world. Especially in 2007 the projects that caught attention include such high-scale projects as The Palm, Hydropolis, Dubai Marina, Burj Dubai, Dubailand, Dubai Maritime City and Dubai Waterfront (Oxford Business Group, 2007, p.144). All these projects maintain that Dubai is planning to be one of the world’s most famous tourist destinations – and it seems as if they are succeeding. Regarding the current development in the emirate, “the signs are positive for continued growth in Dubai's tourism market”, said Khalid Bin Sulayem, Director General of Tourism and Commerce Marketing (DTCM) for the Dubai Government.

At present, there are 47,000 hotel rooms in Dubai, that figure is expected to triple by 2015 (Florian, 2008). This rapid development is not without criticism. According to Reinier de Graaf, director at the Office for Metropolitan Architecture, “things happen in such a speed ... and with so little governmental oversight that to find one person with a complete grasp of what’s going on is a very difficult task.”(Zacks, 2007) To highlight the point of issue, it is important to mention the goals of tourism development in Dubai:

DTCM defines its mission as “The development of sustainable tourism.” (DTCM Website). Additionally, the ruler of Dubai, Mohammed bin Rashid al Maktoum, defines his goal as follows:

“Building on our achievements, preserving our national assets, and achieving comprehensive and sustainable development, we have directed that our current programs be further developed and that a strategic plan be prepared in light of the latest developments and changes.”(Dubai Government, 2007)

To meet the huge present demand countless new hotel resorts are being built as well as artificial islands and the world’s biggest airport. Whenever such a rapid development takes place the concern of sustainability arises. According to the Travel & Tourism Competitiveness Report 2008 established by the World Economic Forum, Dubai is ranked 122 out of 130 countries regarding the environmental sustainability.

“A country’s level of environmental sustainability can be determined by its input measures, such as regulatory policies, and output measures, such as the eco-footprint of a country’s tourism sector (...) and the behaviour of private operators in the industry.”(Ringbeck, Gross, 2008, p.28)

Regarding these contradictory facts, the governmental goal of sustainability on the one hand and the bad results concerning environmental sustainability on the other hand, have leaded the author to ask whether sustainable development can be reached in Dubai.

Consequently, this project will seek to examine the nature of tourism development in Dubai as well as the emerging opportunities and threats with particular reference to the concept of sustainable tourism development.

Thus, the author could formulate the following objectives for this research:

1. Examine the key characteristics of current and likely future tourism development in Dubai.
2. Assess the potential of Dubai as a tourist destination with particular reference to SWOT analysis.
3. Analyse possible threats to tourism development in Dubai.
4. Assess the importance of sustainable tourism development in Dubai.
5. Formulate recommendations as to how further tourism development in Dubai can be realised.

These objectives lead to the following question, which is to be answered after the research:

Is the current level of tourism development in Dubai likely to be sustainable?

1.3 Country Overview

Dubai is located along the southern coast of the Persian Gulf on the Arabian Peninsula. The country borders Saudi Arabia to the west and south, and Oman to the east. It is one of the seven emirates of the United Arab Emirates (UAE).

To the south, the dunes of the Rub Al Khali, the largest continuous sand desert in the world, are located. Along the border of Oman some mountainous terrain can be found. The climate in Dubai is very dry with a minimum of rainfall during winter months. The temperature is pleasant for half of the year, although temperatures in summer surpass 50°. (For a detailed map of the UAE please see appendix 1)

With 1,4 million inhabitants Dubai has the largest population of the UAE and has seen steady 8% annual growth since a decade. The constant flow of expatriate workers is reflected in the unofficial figure of 2 million inhabitants. Expatriates make up over 90% of Dubai’s population. Studies suggest that at least 1million Indian workers live in the UAE, which makes them the country’s largest expatriate population by origin.

The population is expected to grow in the coming years, reaching 5million by 2020 due to steady immigration. Despite all efforts, the number of UAE nationals in Dubai is expected to be less than 1% by 2020. (Oxford Business Group, 2007, p.8)

Due to immense oil reserves the UAE’s has one of the highest per capita GDPs in the world with 34,109 US-Dollar in 2006 (World Bank, 2007). The establishment of free zones has lead economic liberalisation to the degree that it is now one of the most open economies in the world.

FIGURE 1.1: RECENT TREND AND OUTLOOK FOR GDP GROWTH IN THE UAE IN %

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Source: Own preparation following Mintel Country Reports, No 4 Middle East, p.11, London 2007

The current economic success was mainly driven by government policies aimed at improving the business and investment environment, additionally establishing specialized zones and mega projects that helped to attract Foreign Direct Investment. Other factors that supported economic growth are such as availability of labour and land for major real estate projects, good infrastructure and a solid institutional framework. (Dubai Government, 2007)

Dubai in particular has experienced an annual growth rate of 13% since the year 2000, which is exceeding that of its UAE counterparts.

Dubai’s economy has diversified in the last few years to reduce dependence on petroleum. Tourism development is the most important element of this diversification. (Horner & Swarbrooke, 2004, p.105) Moreover real estate, finance services, trade and construction are part of the diversification away from oil, which seems to be successful:

in 2005 the non-oil sector contributed 95% to GDP. (Dubai Government, 2007)

The following figure underlines the strengths and weaknesses of Dubai’s economy.

FIGURE 1.2: DUBAI’S SECTORAL STRENGHTS IN LIGHT OF GLOBAL FUTURE GROWTH

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Source: Dubai Government (2007)

However, the current economic downturn worldwide shows already its first impacts on Dubai: money is not so freely available, the frenzy-driven real estate market has cooled down and the stocks of developing companies, for instance ‘Nakheel’, are stumbling (Hauser).

2 LITERATURE REVIEW

2.1 Theories on the tourism industry

According to Pender & Sharpley (2006, p.4) there is no universally agreed definition of the tourism industry; it is even unsure whether tourism can be described as an industry. Mill-Morrison (1998, p.2), for instance, argues that it is difficult to describe tourism as an industry due to a great deal of complementarities, meaning the interplay of tourists, businesses and environments, as well as competition among the different tourism businesses.

The most widely accepted definition was formulated by the World Tourism Organization (WTO) and provided at the International Conference on Travel and Tourism Statistics in Ottawa in 1991:

“The activities of a person outside his or her usual environment for less than a specific period of time and whose main purpose of travel is other than exercise of an activity remunerated from the place visited.”(Chadwick, 1996, p.66)

Another definition that is endorsed by the International Association of Scientific Experts on Tourism regards tourism as a complex of environmental impacts (Hunziker & Krapf, as cited in Leiper, 2004, p.41):

“Tourism is the sum of the phenomena and relationships arising from the travel and stay of non-residents, in so far as they do not lead to permanent residence and are connected with any earning activity.”

2.1.1 Tourism Planning, Development and Management

The WTO suggests that developing and managing tourism requires essentially tourism development policies. These policies should be based on the aims of tourism development in the country in order to integrate tourism appropriately. The tourism industry makes an attractive development option, especially for countries whose economy is or respectively was dependent on a specific sector like Dubai. In this case tourism is used as an important contributor to diversify away from the oil sector. In order to make efficient use of tourism as an option to diversify the economy, tourism development needs to be controlled and planned properly.

According to Cooper et al (2003, p.314), tourism planning manifests itself in a variety of forms including:

- Tourism policy
- Marketing strategies
- Taxation structure
- Infrastructure developments
- Education and training

How tourism planning and development have been realised in Dubai will be assessed in chapter 4.1.

2.1.2 The TALC-Model

The Tourism Area Life Cycle Model (TALC) was developed by Butler (1980) for understanding the development of a tourist destination.

FIGURE 2.1: TALC-MODEL BY BUTLER

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Source: Butler, 2006

It identifies five different stages of tourism development:

1) Exploration
2) Involvement
3) Development
4) Consolidation
5) Stagnation / Maturity

“By analysing destinations, it is possible to outline a mix of factors, or forces, that help to identify at which stage of the TALC a destination is positioned.”(Cooper, 2003) Hence, according to Butler as quoted in Wall and Mathieson (2006, p.59) there is a mix of forces at each stage that outlines the destination’s position, such as the number and type of visitors, length of stay, the ownership of tourism businesses, architecture and environment as well as resident attitudes and involvement Wall and Mathieson (2006, p.60) additionally mention the importance of Butler’s study:“Consequences of tourism are likely to vary greatly with the stage of development.”As this assessment will especially analyse the impacts of the tourism development in Dubai, the author considered it to be important applying Butler’s theory to the country. Adapting this model to Dubai will help the author to assess the country’s current level of development, which is a core objective of this study.

Moreover, in terms of tourism planning, Murphy as quoted in Hall & Page (2006, p.322) argued that “Planning is concerned with anticipating and regulating change in a system, to promote orderly development so as to increase the social, economic and environmental benefits of the development process.”

Consequently, the author will particularly look at the social, economic and environmental impacts of the tourism development in Dubai.

2.2 Impacts of Tourism

The whole tourism industry is characterised by a huge complexity regarding the interplay of tourists, businesses, agencies and the environment in which tourism occurs (Rathjens, 2006). Accordingly, many different impacts caused by tourism and the presence of tourists can be pointed out.

Tourism has many positive benefits, such as employment creation and revenue.“However, there are many negative consequences of tourism, including the often-cited destruction of both the environment and the traditions of local populations.”(Pender as cited in Pender & Sharpley, 2006, p.8)

According to Vellas & Becherel (1995, as cited in Pender & Sharpley, 2006), international tourism even is“one of the most influential phenomena in the economic and social development of our society.”

Dubai as a tourist destination puts emphasis on mass tourism by the massive development of infrastructure both in the city centre and at the coast. This type of tourism is the one that causes the most negative impacts and needs to be planned carefully (Hall & Page, 2006). The future challenge for the Dubai Government will be to handle these impacts appropriately in terms of strategic tourism planning.

The economic, socio-cultural and environmental impacts of tourism to the country will be demonstrated in Chapter 4.4; as well as the assessment of whether the country is capable to manage the consequences or not.

4.3 The Concept of Sustainability

The origin of the idea of sustainable development leads back to the Brundtland Report (1987) established by the World Commission on Environment and Development (WCED). Within the report sustainable development is defined as “Meeting the needs of the present without compromising the ability of future generations to meet their own needs”.

Moreover the report highlights three pillars of sustainable development: economic growth, environmental protection and social equity. (Mak, 2004, p.182)

2.3.1 Sustainable tourism development

Over the next ten years the Word Travel & Tourism Council (WTTC) suggests that global demand for tourism will continue to grow steadily 4.2 percent per year. The long-term impacts of this growth, especially concerning negative externalities, could ultimately outweigh economic gains.

These concerns lead to the concept of sustainable tourism development. It has been defined by Butler, as quoted by Wall & Mathieson (2006, p.290), as:“Tourism in a form which can maintain its viability in an area for an indefinite period of time.”

Moreover, the WTO suggests eleven principles that should be fulfilled in order to achieve sustainable tourism development:

1) Protect and conserve natural resources
2) Multi-stakeholder approach
3) Maintain the well-being & involvement of host population
4) Provide meaningful & fairly remunerated employment
5) Have economic benefit
6) Have a long-term view
7) Have a triple bottom-line approach
8) Be equitable
9) Governments must play a leadership role
10) Educate tourists about environmental & social concerns
11) Obtain optimum guest satisfaction

At first sight, Dubai meets these conditions only partly. Many new hotels and resorts are being built currently to meet the enormous present demand. It is questionable if this demand will sustain the next years. According to Mintel Country Report No 4,“there is reason to believe that Dubai may be vulnerable to oversupply in its lodging and tourism-related offer.”As already mentioned, one goal of the DTCM is the development of sustainable tourism. Butler as stated in Pearce and Butler (1993) poses the question of what sustainable tourism actually means. Destinations can be sustainable in many senses – being able to attract tourists and secure economic growth and employment makes a destination sustainable. At the same time the destination can be unsustainable in terms of protection of the environment and conservation of natural resources. Obviously there is a considerable conflict between economic and environmental interests. (Stabler, 1997, p.12)“The new challenge is to manage this growth, which generates income and employment, while limiting the industry’s impacts on the environment and conserving the cultural heritage and local ecosystems of a country.”(Ibrahim & Girgis, 2008, p.45)

Weaver (2006) has contributed to the discussion about the contradictory benefits of tourism in creating the “advocacy platform” and the “cautionary platform”, as the following table demonstrates:

FIGURE 2.2: ADOVACY AND CAUTIONARY PLATFORM

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Source: Weaver, 2006, p.15

The platform shows that sustainable tourism development can be defined differently depending on the group of interest. For supporters of the advocacy platform sustainable development means continued tourism growth and intensification, whereas supporters of the cautionary platforms would suggest alternative tourism and a halt to mass tourism development.“Accordingly, the consensus surrounding the principle is liable to dissolve once a diverse group of stakeholders begins the process of implementation and the different strategies and outcomes associated with the attainment of the principle become apparent.”(Weaver, 2006, p.19)

In order to analyse the potential of Dubai’s tourism development to be sustainable, meaning sustainability not only with regard to environmental issues but also to sociocultural and economic issues, the Travel & Tourism Competitiveness Report 2008 established by the World Economic Forum has been taken into account.

“The results published by the World Economic Forum in this year’s Travel & Tourism Competitiveness Report can be utilized to assess sustainable tourism from a global perspective. The Index ... enables industry leaders and policymakers to identify obstacles for further development of the industry.”(Ibrahim & Girgis, 2007)

Accordingly, the WTTC has established a concept that is supporting the idea of sustainable tourism development, which is called New Tourism.

“New Tourism looks beyond short-term considerations. It focuses on benefits not only for people who travel, but also for people in the communities they visit, and for their respective natural, social and cultural environments. ... New Tourism is a new sense of coherent partnership between the private sector and public authorities.”

(World Travel & Tourism Council, p.3)

The assessment of whether tourism development in Dubai is likely to be sustainable will take place in the Main Body of this research project.

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