GULF STATES – ECONOMICS & FINANCE
Guests from UAE and Saudi Arabia dominate hotel eid bookings
UAE residents and visitors from Saudi Arabia are dominating hotel bookings across the UAE, as the country prepares for the long Eid break, hospitality experts revealed.
Speaking to source, many hotel and travel officials noted that Dubai remained a popular destination in the GCC, especially during the Eid breaks, due to its wide range of family friendly offerings.
“With the long Eid break, we can really expect to see more guests from the UAE and Saudi Arabia in our hotel since we are very close to City Walk, one of the most popular destinations in Dubai,” said JS Anand, chief executive officer of LEVA Hotels & Resorts.
He added that guests have started looking at holidays in a manner that doesn’t require “master planning.”
“We are expecting to see last-minute reservations from UAE residents in our hotel that take advantage of our staycation offers for the GCC and UAE markets – stay four nights and get one night free,” he explained. “We are also receiving a good amount of reservations and queries from Saudi guests with our special rates. Our bigger units such as the ‘Family Club’ suite with three cluster bedrooms and ‘Deluxe Interconnecting’ rooms are popular during this time among GCC visitors travelling with their families to celebrate Eid.”
Suhaila Saqer Obaid Ghubash, director of Events and Festivals, Dubai Events and Promotions Establishment, also spoke about how the retail industry in Dubai has geared itself up for the event with special holiday promotions and events.
“Retail outlets across the city are making great efforts to honour the joyous celebration of Eid in Dubai. From entertainment, to retail promotions and family-friendly events, there will be many exciting activities for residents and visitors to enjoy during the special holiday,” she said. “Eid Al Adha is a key event in the annual Retail Calendar and we work closely with our partners to offer the best experiences for everyone spending Eid in Dubai. In addition to the themed décor that takes over Dubai during this season, the city’s malls will also be celebrating with a variety of sales, events and promotions, making Dubai a top retail destination over the holiday.”
She added: “We are confident that hotels and resorts across the emirate will offer attractive deals at highly competitive rates for residents to enjoy. Dubai offers a range of offers including 5-star luxury resorts, desert camps, and boutique hotels, giving everyone the chance to enjoy the festivities and relax during the summer break.”
Dubai cruise sector posts record increase in tourist numbers
Bolstering its position as a premier international cruise destination, Dubai concluded its 2018-19 cruise season with a record increase of over 51 percent in cruise tourist footfall and a 38 percent increase in cruise ship calls season-on-season.
Dubai welcomed through Mina Rashid Cruise Terminal 846,176 cruise visitors via 152 ship calls during the season, compared to 558,781 visitors onboard 110 ships in 2017-18. An additional 211 ship calls are now confirmed for the upcoming 2019-20 season.
This growth reflects the committed joint efforts to boost the cruise sector by the Dubai Cruise Committee made up of leading industry partners: Dubai’s Department of Tourism and Commerce Marketing (Dubai Tourism); DP World UAE Region, operator of Mina Rashid; Emirates airline; General Directorate of Residency and Foreigners Affairs in Dubai; and Dubai Customs.
The 2018-19 season witnessed 14 maiden calls and welcomed leading international cruise liners such as TUI Cruises, Aida Cruises, MSC Cruises, Costa Cruises, Pullmantur Cruises, P&O Cruises and Royal Carribean cruise line to the homeport in Dubai, all expected to return in the upcoming season. The season concluded with the departure of the Karnika, India’s first premium cruise ship from Jalesh Cruises which has recently homeported in Dubai.
Mohammed Abdul Aziz Al Mannai, CEO of P&O marinas and executive director, Mina Rashid, said: “We are pleased to move in the right direction in promoting Dubai as a popular destination for international cruise tourists. As the Middle East’s premier destination for cruise operators, Mina Rashid offers a value proposition to global luxury cruise liners. It is reassuring to see the steady double-digit increase in tourist traffic at Mina Rashid each year. Central to this stellar performance is our flagship Hamdan bin Mohammed Cruise Terminal, capable of handling 14,000 passengers a day.”
Hamad bin Mejren, senior vice-president of Dubai Tourism, said: “The success of the 2018-19 cruise season stands as a true testament to the robust growth of Dubai’s cruise industry and the city’s growing appeal as a year-round ‘must-visit’ destination. We are delighted to welcome leading cruise lines once again to operate regular international itineraries out of the city. We will continue to actively work with our valued network of local, regional and global partners to further highlight Dubai’s ease of accessibility, driven by efficient cruise terminal operations and continual enhancements that have welcomed an ever-increasing number of operators to anchor in the emirate.”
Developing Dubai’s cruise industry to its maximum potential falls in line with the Dubai Silk Road strategy prepared by the Ports, Customs and Free Zone Corporation in collaboration with key government entities.
Abraaj’s Naqvi sentenced to prison by UAE court
Arif Naqvi, the founder of defunct Dubai-based private equity firm Abraaj Group, was sentenced in absentia to three years in prison by a court in the United Arab Emirates for a case involving low-cost carrier Air Arabia PJSC, people familiar with the matter said.
It’s unclear whether Naqvi will serve the sentence, given he’s in London awaiting a hearing over his potential extradition to the U.S. The sentencing comes a week after the Dubai financial center watchdog fined the collapsed buyout firm a record $315 million for misleading investors and misappropriating their funds.
Naqvi’s legal representative declined to comment, and Air Arabia representatives weren’t available to comment. Calls to the court in Sharjah, where Air Arabia filed the case, were unanswered.
Naqvi faces fraud allegations in the US. In London, he was granted conditional bail in May after paying the largest security bond ever ordered in the U.K. While he awaits his extradition hearing, he must wear an electronic tag and stay in his London home as part of the bail conditions. Naqvi maintains his innocence and expects to be cleared of any charges, his spokesman has previously said.
In February, the airline reported a full-year loss after booking impairments to cover its $336 million exposure to Abraaj. The buyout firm borrowed money from Air Arabia, on whose board Naqvi sat. The money was then used to cover shortfalls in one of the Abraaj funds and mislead investors, according to U.S. prosecutors.
Saudi Arabia’s business gauge slowed to 5-month low in July
A measure of activity in Saudi Arabia’s non-oil private sector dropped in July for the first time this year, hitting a five-month low in a sign that economic growth was losing momentum at the start of the third quarter.
The IHS Markit Purchasing Managers’ Index fell to 56.6 after reaching a 19-month high of 57.4 in June. Export orders rose at the quickest pace since February 2017, but there was only a marginal increase in employment, and businesses surveyed reported lower optimism over future output.
“Saudi Arabia’s non-oil private sector started the second half of the year growing at a healthy rate,” Phil Smith, principal economist at IHS market, said in the report. “However, the survey’s indicators for output, new orders and future expectations are all signaling some loss of momentum compared with the second quarter.”
The kingdom has struggled to get its economy back on track since it contracted 0.7 percent in 2017, an after-effect of the oil price rout and austerity measures that hit businesses hard. Second-quarter budget data showed that a long-promised injection of government cash was finally materializing as officials try to boost growth. Gross domestic product is expected to grow 1.7 percent this year, according to source.
Rate cut to support credit growth across GCC
The recent interest rate cut by the Federal Reserve is expected to boost private sector credit growth and credit demand in key GCC economies, according to economists.
GCC central banks, with the exception Kuwait, announced interest rate cuts following the 25 basis points interest rate cut by the Federal Reserve last week. With the GCC currencies pegged to the dollar, most central banks in the region instantly followed the Fed and cut their key policy rates. Kuwait — the only GCC country with a basket-pegged currency — kept its policy rate on hold.
Monetary easing is expected to make borrowing cheaper for investors across key GCC economies. Private sector credit growth in Saudi Arabia is accelerating, reaching 2.7 percent year on year in June 2019, after dropping to negative territory in 2017 and early 2018.
Gross credit growth in the UAE accelerated 0.7 percent month on month and 4.3 percent year on year in June according to the latest central bank data. The strongest monthly growth in credit was from the government related entities and private businesses. Year to date (YTD) data in the UAE showed private businesses’ credit growth has moderated from end-2018, while retail has contracted by 1.5 percent YTD.
Economists said lower rates are expected to incentivise borrowing especially private corporate and retail borrowings.
“Lower interest rates will make credit more available to the private sector and provide a window of opportunity for companies to refinance loans at a lower cost. Despite lower oil prices, liquidity conditions in the region still look healthy except Oman,” said Garbis Iradian, Chief Economist, Middle East and North Africa, Institute of International Finance (IIF).
A pick up in private sector credit growth is expected to lift the non-oil private sector growth in the region which suffered during the past 5 years largely due to persistent fall in oil prices compounded by higher cost of funds that resulted from monetary tightening.
“While more accommodative monetary policy conditions may give a boost to business activity, continued low oil prices and political tensions within the region may limit the improvement in business confidence,” said Boban Markovic, senior research analyst at the IIF.
Although lower interest rates are supportive of credit growth, economists said apart from cost of funds, credit demand will largely remain a function of overall economic conditions that affect business confidence.
Passenger traffic more than doubles at DWC
Passenger traffic at Dubai World Central (DWC) more than doubled in the first half of 2019 as many flights had to be diverted there while a runway was closed at the city’s main airport.
Operator Dubai Airports said passenger traffic jumped to 1.2 million from 517,813 in the same half of 2018. This was during a 45-day closure of the southern runway at Dubai International Airport from April 16 to May 30.
More than 900,000 of the 1.2 million passengers in the first half were recorded in that 45-day period, or the equivalent of the airport’s entire annual passenger traffic in 2018.
“The 45-day period was a major challenge for DWC as the airport had to accommodate a massive spike in both passenger and flight traffic — going overnight from 10 flights a day to 80 flights on peak days,” said Paul Griffiths, chief executive officer of Dubai Airports.
Russia was the top destination country in the first six months of the year, followed by Saudi Arabia, India, and Germany.
For cargo, however, DWC saw a year-on-year decline of 5.3 percent, handling 450,000 tonnes of freight in the first half of 2019. The operator attributed that to “softening of the overall air cargo market.”