Travel Retail in the United Arab Emirates-Dissertation Writing Help
Headlines
·
There are 816 travel retail
outlets across the UAE, with 28 new outlets opening in 2007, an increase of 4%
compared to 2006
·
Total revenues for all travel
retail amounted to AED15,611 million in 2007, an increase of 13% compared to
2006, with the greatest revenue generator remaining flight-only packages, which
account for 60% of all revenues in the sector
·
One key factor affecting
inbound travel agencies in 2007 was a shortage of rooms in the UAE which made
it difficult for them to attract visitors
·
Competitive activity is
nevertheless significant, with DNATA engaging in ongoing promotional offers and
on-line developments, while Emirates Holidays has started offering packages for
new destinations in line with Emirates Airlines' route expansions
·
With a booming tourism sector,
travel agencies will continue mushrooming in the UAE, with the number predicted
to reach 492 in 2012, out of a total of 987 travel retail outlets across the
UAE
Trends
·
Among the 816 travel retail
outlets operating across the UAE, 145 are exchange services, 266 are tour
operators and 434 are fully fledged travel agencies.
·
Total revenues for all travel
retail amounted to AED15,611 million in 2007, an increase of 13% compared to
2006, with the greatest revenue generator being flight-only packages, which
account for 60% of all revenues in the sector. Flight-only was also the fastest
growing subsector in 2007, with growth of 17%, followed by city breaks, with
13%, and adventure holidays, with 11%. Flight-only packages are increasingly
important as consumers have gained access to diverse sources of information –
notably the Internet – which is making it easier to book trips by combining offers
from different suppliers. City breaks and adventure holidays are gaining in
importance due to the growing opportunities for this kind of travel which are
being offered both inside the UAE and in neighbouring countries.
·
Agents have reported being
affected by slashed airline commissions, increasing Internet penetration,
shortages of trained personnel and a lack of available rooms in the UAE.
Increased Internet penetration is a reason for strong growth in flight-only
packages, as travellers are more sophisticated and are increasingly capable of
organising their trips in the most cost efficient way, seeking accommodation
from local providers at their chosen destination and identifying helpful
sources of information on-line.
·
The largest concern in
attracting visitors to the UAE in 2007 was a shortage of rooms, which caused
travel agents not to deliver on their marketing and promotional promises in
many instances. This was especially true for Abu Dhabi where the availability
of new rooms is not expected before another two years. Agencies have repeatedly
been unable to offer customers what they were asking for because of the
shortage. DNATA, the UAE's largest travel agency, complained about the shortage
and reported significant missed opportunities because of it. Many agencies have
resorted to promoting other destinations than the UAE across the Middle East
region. In Dubai, though, a large number of rooms are expected to be ready at
the beginning of 2008.
·
A key factor affecting the
travel retail sector is the development of on-line purchasing, which is proving
challenging for travel agencies, although if capitalised on appropriately it
could become a growth factor. Many agencies are starting to recognise that
incorporating on-line trading in their operations is the best way forward. Most
of the new travel operators are therefore developing comprehensive websites and
are seeking to offer on-line booking, in order to attract travellers who are
increasingly turning to the Internet. However, growth is hampered by the fact
that quick and easy access to the Internet remains an issue for some, despite
the growth of Internet penetration, whilst security concerns with revealing
credit card details on the Internet are common amongst residents in the UAE.
Nevertheless, given the rapid rate at which on-line booking is growing in
Europe and the US, it is likely to catch on quickly in the Middle East and
specifically in the UAE, potentially causing agencies to lose more customers.
·
In 2007, only 3% of total
bookings were made on-line, although on-line sales rose by 25% compared to
2006, with 2008 predicted to experience similar growth. The CAGR between 2007
and 2012 is expected to be 30%, with on-line bookings accounting for 5% of
total sales in 2012.
·
Face-to-face interaction with
travel agents remains important to Middle East travellers, as Arab culture
emphasises building relationships of trust with people, businesses and
suppliers through direct contact. This necessitates attending exhibitions such
as the Arabian Travel Market and ACTB, (Austrian and Central European Travel
Business) during which travel agencies and tourism boards have the opportunity
to widen their networks and meet suppliers and business partners, as well as
travellers and potential tourists. It also requires agencies to maintain a
strong focus on both personal and on-line customer interaction.
Growth Sectors
·
Adventure tourism is attracting
an increasing number of UAE travellers, driven by the rising number of
destinations for this type of tourism in the UAE and in neighbouring countries.
The UAE itself has much to offer adventurers and residents of the UAE wishing
to take a short break at a close by destination, without having to spend too
much money. Emerging adventure destinations in the UAE include Um Al Quwain,
one of the smallest emirates. Um Al Quwain is home to the Aeroclub, a skydiving
centre teaching accelerated free fall and tandem skydiving. It also offers
helicopter flights and aerial photography activities.
·
The Ras Al Khaimah-based agency
Mountain Extreme is an eco-tourism and adventure tourism provider which offers,
for instance, a two-day trip to the Majlis Al Jinn, which is one of the largest
caves in the world, some 340m long and 228m wide, with a height of 120m.
Mountain Extreme operates mostly as an inbound tour operator offering adventure
and eco-tourism, although the agency also offers tours to Oman, which is a
growing destination for adventure tourism. The agency reported growth in
revenues of 78% in 2007, indicating the growing importance of this subsector,
especially in light of the increasing number of Europeans and other expatriates
in the country, and the increasing number of budget travellers who are
generally more inclined to look for adventure and eco-tourism.
·
Following the emergence of
artificial ski slopes in Dubai, the outbound market for ski trips has
experienced growth. Many agencies, such as Al-Futtaim and Emirates Holidays,
offer ski packages to traditional destinations, such as Lebanon and France. Ski
Dubai, the company behind the development of Dubai's first artificial ski
slope, also promoted luxury ski trips in 2007. The company teamed up with
SWISS, the Swiss airline and Première Neige, a leading specialist in luxury ski
holidays and an exclusive chalet operator in the French Alpine village resort
of Sainte Foy to create a special offer for UAE-based winter sports
enthusiasts. Each adult buying a Ski Dubai session pass received a voucher that
went into a draw with a first prize of a one-week holiday for four people in
Sainte Foy, including flights, transfers, accommodation, ski passes and
equipment hire.
·
Cruise packages experienced 7%
growth in 2007, driven by the increasing number of cruise ships and packages
such as Silversea, which added 14 dedicated segments for the Middle East
market. It offers 10-day round trips from Dubai, visiting Muscat, Fujairah,
Khasab, Kish Island, Al Manamah and Abu Dhabi. Silversea Cruises also offers
"Arabian Nights", a selection of cruises within the UAE and
surrounding areas. The cruise industry is generally one of the fastest growing
sectors of the travel industry worldwide, with strong growth in the luxury end
of the market, which is likely to be reflected in the UAE too.
·
Pilgrimages and religious
tourism are also common for Muslim nationals and Muslim expatriates living in
the UAE, with the annual pilgrimage to Mecca being the most prominent event of
the year.
Competitive Landscape
·
DNATA remains the UAE's
strongest and most dynamic travel agency, offering inbound and outbound travel
packages. DNATA held 8% of sector value in 2007, down slightly from 2006. This
decline was due to increasing competition in the market, with a growing number
of smaller agencies which can cater to the basic needs of consumers who may
only be looking for flight packages. DNATA also suffered from the shortage of
rooms during 2007, which caused the agency not to be able to meet its
customers' expectations. Nevertheless, DNATA remains the largest and most
active group, with relentless promotional and marketing efforts throughout the
year. For instance, during 2007, DNATA inaugurated its groundbreaking airport
transfer service, made available exclusively to its customers and operating
every day of the week, year-round. Passengers can request the service at the
time of purchasing their ticket. The DNATA Travel outlet in Al Quoz was the
first outlet to offer this service to the airport and has a designated drop-off
point. Also during 2007, DNATA Travel was appointed General Sales Agent for
passenger sales for Kingfisher Airlines for Abu Dhabi, Sharjah, the Northern
Emirates and Kuwait.
·
DNATA has continued image
building efforts through its presence at a number of trade shows, such as the
Business Travel Show. DNATA has also chosen to combat the issue of increasing
Internet penetration and bookings by focusing on the wholesale and retail
business in key areas where the agency enjoys a clear advantage, such as in
high-end leisure travel, which requires more personalised service. The agency
has also enhanced its call centre services and consolidated its product
offering for corporate clients. Nevertheless, while DNATA still believes in the
importance of personalised service and direct interaction with customers, the
agency is fully aware of the importance of an on-line presence and thus it
launched its corporate travel management solution in 2007, a new type of
on-line booking system providing unique tracking and reporting tools for travel
policies. Further on-line developments should follow in the near future.
·
Maintaining its position as
number two travel agency is Emirates Airlines' leisure branch, Emirates
Holidays, which accounted for just under 8% of total value sales in 2007. With
a strong dependence on Emirates Airlines, and acting in line with the airline's
growth strategy, Emirates Holidays is constantly developing new products and
packages for new destinations according to the airline's new developments.
Following the launch of Emirates' new route to Canada, the agency introduced
tailor-made vacations to Canada, offering the choice of seven hotels in
Toronto, with excursions to Niagara Falls, or a tour of the East Coast,
including Montreal, Quebec, Ottawa and Niagara Falls, or to the West Coast,
including Calgary, the National Parks of Banff and Jasper, Sun Picks, Whistler,
Victoria and Vancouver. Ski trips in Canada are also offered on separate
packages.
Prospects
·
With a booming tourism sector,
the travel agencies subsector will continue to grow in the UAE. The number of
agencies is predicted to reach 492 in 2012, from a total of 987 travel retail
outlets across the UAE. Revenues in the travel retail sector are predicted to
grow at a CAGR of 14% between 2007 and 2012, to amount to AED30,539 million at
constant 2007 prices. Flight-only packages will remain the fastest growing
subsector, with a CAGR of 17%, followed by city breaks, with a 14% CAGR, and
adventure tourism, with an 11% CAGR.
·
Although a growing number of
young singles are moving to Dubai for work, travel agents have yet to start
targeting singles with customised packages, focusing instead only on family
vacations. Although UAE nationals usually prefer travelling with their
families, this is not the case for single expatriates living in the UAE. The
Dubai's expatriates website www.expatriates.com often posts advertisements for
holidays with prices included for one. This could be a substantial market for
travel agencies as they start identifying the growing demand from young single
expatriates.
·
A notable development in the
UAE is the establishment of a space tourism hub, with the official appointment
of Dubai-based travel agency Sharaf Travel as Virgin Galactic's
"accredited space office" for the Middle East region. The agency will
offer commercial space flights to consumers in the Middle East at a cost of
US$200,000 per ticket. The first flights are likely to be launched in 2009,
with just one flight a week at the beginning. Virgin Galactic sees enormous
potential in the Middle East region for this kind of travel, especially in the
UAE, as Dubai is increasingly positioned as an "eccentric"
destination, where everything is possible, even space travel. The question
remains, however, whether space travel is indeed going to be the next big thing
in the UAE's travel market.
Sector Data
outlets
2002 2003 2004 2005 2006 2007
- Exchange
services 94 100 110 120 128 136
- Tour operators 216 225 235 247 250 258
- Travel agents 338 354 367 389 410 422
Travel retail
outlets 648 679 712 756 788 816
Source: Euromonitor International
Note: Dedicated currency exchange
outlets only
AED million
2002 2003 2004 2005 2006 2007
- Accommodation
only 582.0 651.0 701.3 742.3 801.0 865.1
-
Adventure/trekking 307.1 352.9 348.9 375.9 412.0 455.3
holiday
- City break 502.0 566.1 601.5 679.7 768.8 871.0
- Cruise 200.2 231.5 247.5 263.0 280.1 298.8
- Spa packages 168.6 184.5 203.4 217.5 225.2 233.7
- Flight only 5,659.5 6,023.4 6,325.0 6,972.7 8,034.7 9,416.7
- Other transport 113.1 124.8 137.1 144.0 159.1 168.0
- Fly-drive 542.5 566.0 593.9 652.9 719.5 757.6
- Package holiday 973.9 1,062.2 1,164.4 1,221.9 1,294.0 1,374.2
- Travel
insurance 286.5 306.9 329.4 361.1 397.3 437.8
- Foreign
currency 318.7 339.0 360.7 387.1 420.0 454.5
- Traveller’s
cheques 98.5 104.6 111.1 118.2 126.8 135.9
- Other travel
retail 96.9 105.9 116.2 123.2 132.4 142.1
products
Travel retail
products 9,849.5 10,618.7 11,240.4 12,259.5 13,770.7 15,610.7
Source: Euromonitor International
% value
2002 2003 2004 2005 2006 2007
- Beach 35.0 34.5 33.7 34.0 35.0 36.0
- Countryside 16.0 16.4 16.5 16.7 16.0 15.5
- Mountain 16.5 16.5 16.7 16.8 17.0 16.5
- Culture 30.6 30.8 31.2 30.5 30.0 31.0
- Other travel
retail 1.9 1.9 1.9 2.0 2.0 1.0
destinations
Travel retail 100.0 100.0 100.0 100.0 100.0 100.0
destinations
Source: Euromonitor International
AED million
2002 2003 2004 2005 2006 2007
Internet 40.6 82.2 150.5 240.8 292.6 390.8
- Direct
suppliers 33.3 67.9 123.2 198.9 248.6 343.9
- Intermediaries 7.3 14.3 27.2 41.9 44.0 46.9
Others 9,808.9 10,536.6 11,089.9 12,018.7 13,478.1 15,219.9
Total 9,849.5 10,618.7 11,240.4 12,259.5 13,770.7 15,610.7
Source: Euromonitor International
AED million
2002 2003 2004 2005 2006 2007
- Accommodation
only 13.4 27.7 47.8 79.5 117.7 177.5
- Flight only 19.1 38.1 72.1 112.1 128.4 155.4
- Other transport
only - - - - - -
- Car rental only 0.3 0.9 2.5 4.6 6.8 9.9
- Dynamic
packaging - - 0.4 2.7 2.4 3.8
- Traditional
package 7.2 13.7 24.4 36.8 32.7 37.3
holiday
- Other travel
retail 0.6 1.7 3.3 5.1 4.8 7.0
online sales
Travel retail
online 40.6 82.2 150.5 240.8 292.6 390.8
sales
Source: Euromonitor International
Note: Others includes traveller's
cheques and travel insurance
% retail value
rsp
Company 2003 2004 2005 2006 2007
DNATA World
Travel 8.6 9.1 8.5 8.5 8.2
Services LLC
Emirates Holidays
LLC 7.9 8.3 7.8 7.6 7.5
Arabian
Adventures LLC 7.1 7.6 7.1 6.8 6.2
Al-Futtaim Travel
LLC 6.3 6.8 6.4 5.9 5.3
Al Ansari
Exchange LLC 5.5 4.5 4.9 5.1 5.2
Thomas Cook Al 6.3 6.8 6.4 5.8 5.2
Rostamani LLC
Others 58.3 56.9 59.0 60.4 62.4
Total 100.0 100.0 100.0 100.0 100.0
Source: Euromonitor International
Value
sales Number
of outlets
(Local
currency
million)
Al Ansari
Exchange 815.6 50.0
Al Futtaim Travel 822.8 3.0
Arabian
Adventures 972.8 3.0
DNATA 1,278.0 52.0
Emirates Holidays 1,175.0 4.0
Thomas Cook 812.5 5.0
Source: Euromonitor International
outlets
2007 2008 2009 2010 2011 2012
- Exchange
services 136 145 154 164 175 189
- Tour operators 258 266 276 285 295 306
- Travel agents 422 434 447 461 476 492
Travel retail
outlets 816 845 877 910 946 987
Source: Euromonitor International
Note: Dedicated currency exchange
outlets only
AED million
2007 2008 2009 2010 2011 2012
- Accommodation
only 865.1 935.1 1,011.8 1,095.8 1,187.8 1,288.8
-
Adventure/trekking 455.3 503.6 557.4 617.6 685.0 760.3
holiday
- City break 871.0 987.7 1,121.1 1,273.5 1,448.0 1,647.9
- Cruise 298.8 319.2 341.2 365.1 391.0 419.1
- Spa packages 233.7 242.8 252.5 262.9 273.9 285.7
- Flight only 9,416.7 11,017.5 12,901.5 15,120.5 17,736.4 20,822.5
- Other transport 168.0 177.6 187.9 199.0 210.9 223.8
- Fly-drive 757.6 798.5 842.4 889.6 940.3 994.9
- Package holiday 1,374.2 1,460.8 1,554.2 1,655.3 1,764.5 1,882.7
- Travel
insurance 437.8 482.9 533.1 589.1 651.6 721.3
- Foreign
currency 454.5 491.3 530.6 949.8 1,023.8 1,102.7
- Traveller’s
cheques 135.9 145.6 155.8 166.5 177.8 189.8
- Other travel
retail 142.1 152.3 163.1 174.5 186.6 199.3
products
Travel retail
products 15,610.7 17,714.8 20,152.7 23,359.2 26,677.7 30,538.7
Source: Euromonitor International
AED million
2007 2008 2009 2010 2011 2012
Internet 390.8 492.5 630.0 818.4 1,080.2 1,448.7
- Direct
suppliers 343.9 443.3 578.0 763.3 1,021.3 1,385.2
- Intermediaries 46.9 49.2 51.9 55.1 58.9 63.4
Others 15,219.9 17,222.3 19,522.7 22,540.8 25,597.5 29,090.0
Total 15,610.7 17,714.8 20,152.7 23,359.2 26,677.7 30,538.7
Source: Euromonitor International
